SOX after Ten Years: A Multidisciplinary Review

Suraj  Srinivasan; John C. Coates IV

Article | Accounting Horizons

SOX after Ten Years: A Multidisciplinary Review

by Suraj Srinivasan and John C. Coates IV

Abstract

We review and assess research findings from 120+ papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX, but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area and propose an agenda for better modeling costs and benefits of financial regulation.

Keywords: Financial Reporting; Laws and Statutes; United States;

Format: Print

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Citation:

Srinivasan, Suraj, and John C. Coates IV. "SOX after Ten Years: A Multidisciplinary Review." Accounting Horizons 28, no. 3 (September 2014): 627–671.

This case explores a new board director who asks a detailed question about a footnote in the lengthy board packet distributed to directors by management. The case allows for discussion about the amount of information and level of detail provided by management, the level of preparation directors engage in prior to board meetings, and the appropriate strategic focus of the board. This case is part of a series of vignettes that capture different dilemmas faced by directors as they join boards of companies and understand the dynamics of the new boards that they join.

This case explores a new board director who wants more detail from the management team than his fellow directors are willing to press for. New board director Sam Pesca is frustrated that CFO Alex Marotta provides only a minimal two-page financial summary at board meetings, despite Pesca’s requests for more comprehensive information. The other directors object to pressing Marotta for more detail, and young CEO R.J. Oscott asks Pesca to refrain from pressing the CFO. This case is part of a series of vignettes that capture different dilemmas faced by directors as they join boards of companies and understand the dynamics of the new boards that they join.

Case | HBS Case Collection | July 2020

Driving Transformation at the Majid Al Futtaim Group

Suraj Srinivasan and Esel Çekin

The case opens with Alain Bejjani, CEO of Majid Al Futtaim (MAF) Holding, anticipating on the Group’s next phase in the multi-year transformation journey and reflecting on the initiatives he implemented to create the Group’s growth-oriented culture. Founded in 1995, MAF Group was a regional conglomerate, operating shopping malls, and retail and leisure establishments across 12 businesses in 15 markets in the Middle East, Africa, and Asia. The case describes the series of structural changes that Bejjani undertook since he became the CEO in 2015, how he transitioned the Holding company from a passive investor to a strategic architect model, and assumed ownership of the brand, culture, and talent across the entire organization for all its operating companies: MAF Properties, MAF Retail, and MAF Ventures. The case discusses the steps that the Group undertook—creation of the Leadership Institute, a new performance management system, investments in digital technology and analytics capabilities, and the launch of the School of Great Moments to instill a focus on customer experience. By November 2019, Bejjani recognized that the organization had evolved considerably in the past five years. He wondered about the next steps in scaling and ability to execute strategy. How much more could he push the organization to continue to change?

Keywords: Transformation; Organizational Change and Adaptation; Organizational Culture; Growth and Development Strategy; Retail Industry; United Arab Emirates; Middle East; Dubai;

Citation:

Srinivasan, Suraj, and Esel Çekin. "Driving Transformation at the Majid Al Futtaim Group." Harvard Business School Case 121-002, July 2020. View Details

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SOX after Ten Years: A Multidisciplinary Review

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