An excellent piece by Michael Malone in the WSJ today (thanks S. Berger):
Given a fate of living under the magnifying glasses of SOX and FD, who in their right mind would want to sit on a corporate board these days? The smart board-level people I know in Silicon Valley now reduce their involvement to being merely corporate “advisers.” Thus, the intellectual capital of America’s high tech company boards is falling by the month.
It is often noted in dismay that military academies teach the last war, not the next one. The same can be said for business regulation. In the zeal to punish the excesses of the dot.com boom, the federal government, with the tacit approval of the electorate, sought to not only punish the small number of real evildoers but also build the perfect universal plugs for all of the perceived holes in existing business practices.
The result was Sarbanes-Oxley, Regulation FD and stock option valuation — three great lessons in the law of unintended consequences. Let’s do our own accounting: Thanks to this troika, fewer new companies are going public; economic power is being concentrated in the hands of fewer companies; competition is reduced; new wealth is less widely distributed; the rich are getting richer; fewer talented people want to join entrepreneurial ventures; and corporate boards are getting stupider and more paranoid. And, please note, one of the crucial triggers for economic booms — a burst of young tech company IPOs — has now largely evaporated.
Just curious, but is this really what federal regulators, Congress and shareholder rights activists had in mind?
