US firms not disadvantaged by Sox, claims Oxley

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The Sarbanes-Oxley Act (Sox) has not put US businesses at a competitive disadvantage to their foreign counterparts, one of the authors of the law has claimed.

Speaking with IT advisory Gartner, Michael Oxley said that despite indications that Europe and Asia have proved more attractive for investors and initial public offerings since the Act was passed five years ago, the US still has the safest and strongest capital markets.

Oxley said that the maturity of developed and developing markets and tighter corporate governance procedures in other jurisdictions have also played a part in dissuading foreign firms to list in New York.

"Frankly, it has been mostly the opposite of what many predicted. Other countries have stepped up and understood how important it is to have these kinds of standards and I would expect that this will continue apace and continue to pay great rewards," Oxley said.

He acknowledged that the burden of some elements of Sox went too far in its earliest form but claimed recent revisions taken by the Public Company Accounting Oversight Board (PCAOB) and the Securities Exchange Commission are making life easier for firms.

“The implementation of Section 404 by the PCAOB was a little onerous but changes are ongoing now with the most burdensome element – auditing standard number 2 – now being replaced, so things are getting better,” he said.

Oxley stepped down from the US Congress in January this year. He is currently vice chairman of the Nasdaq stock exchange.

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