Sarbanes-Oxley, Corporate Federalism, and the Declining Significance of Federal Reforms on State Director Independence Standards

36 Pages Posted: 31 Jul 2006

See all articles by Lisa M. Fairfax

Lisa M. Fairfax

University of Pennsylvania Carey Law School - Institute for Law and Economics; European Corporate Governance Institute (ECGI)

Abstract

Commentators have argued that the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley" or the "Act") raises federalism concerns because it regulates the internal affairs of a corporation, including the composition of, and qualifications for, corporate boards, in a manner traditionally reserved to states. This Article responds to those claims, arguing that the Act reflects a relatively minimal intrusion into state law, particularly with regard to issues of director independence. This Article further argues that the Act's failure to disturb state law on these issues may impede its ability to tighten director independence standards and by extension may undermine its ability to improve the quality of directors' monitoring of corporate behavior.

Keywords: Sarbanes-Oxley Act, federalism, corporate law

Suggested Citation

Fairfax, Lisa M., Sarbanes-Oxley, Corporate Federalism, and the Declining Significance of Federal Reforms on State Director Independence Standards. Ohio Northern University Law Review, Vol. 31, p. 381, 2005, U of Maryland Legal Studies Research Paper No. 921036, Available at SSRN: https://ssrn.com/abstract=921036

Lisa M. Fairfax (Contact Author)

University of Pennsylvania Carey Law School - Institute for Law and Economics ( email )

3501 Sansom Street
University of Pennsylvania Carey School of Law
Philadelphia, PA 19104
United States
215-746-2243 (Phone)
215-573-2025 (Fax)

HOME PAGE: http://https://www.law.upenn.edu/faculty/fairfaxl

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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