From 'Federalization' to 'Mixed Governance' in Corporate Law: A Defense of Sarbanes-Oxley
Robert B. Ahdieh
Emory University School of Law
Buffalo Law Review, Vol. 53, p. 721, 2005
Emory Law and Economics Research Paper No. 06-10
Emory Public Law Research Paper No. 06-17
Since the very moment of its adoption, the Sarbanes-Oxley Act of 2002 has been subject to a litany of critiques, many of them seemingly well-placed. The almost universal condemnation of the Act for its asserted 'federalization' of corporate law, by contrast, deserves short shrift. Though widely invoked - and blithely accepted - dissection of this argument against the legislation shows it to rely either on flawed assumptions or on normative preferences not ordinarily acknowledged (or perhaps even accepted) by those who criticize Sarbanes-Oxley for its federalization of state corporate law.
Once we appreciate as much, we can begin by replacing the misleading rhetoric of 'federalization'. More importantly, we might begin to conceptualize a theory of corporate law that is both more effective in advancing our desired ends and perhaps closer to market realities than the competing paradigms presently in ascendance. In this spirit, I offer a model of jurisdictional redundancy - in which federal mandatory rules intertwine with state enabling rules, to create a more indeterminate regulatory regime than we might otherwise pursue. Such a scheme of 'mixed governance' may deprive legal scholars of the opportunity to draw clear distinctions, but may allow the regulation of corporate governance to operate more effectively, and to evolve more efficiently over time.
Number of Pages in PDF File: 38
Keywords: Sarbanes-Oxley, federalization, federalism, nationalization, corporate law, regulatory competition, charter competition, public/private, process/substance
JEL Classification: E44, G14, G18, G34, K12, K22
Date posted: June 13, 2006