Corporate Governance: Codification or Self-Regulation?

Inhaltsverzeichnis (Table of Contents)

• I. INTRODUCTION
• II. NEW ZEALAND'S APPROACH TO THE CODIFICATION OF CORPORATE GOVERNANCE
  • A. The New Zealand Corporate Market
  • B. Corporate Governance in New Zealand: Principles and Guidelines
  • C. NZX Corporate Governance Best Practice Code
  • D. Attracting International Investments
• III. THE SARBANES-OXLEY ACT 2002 – PRIME EXAMPLE OF THE STRCT RULE-BASED APPROACH
  • A. Introduction
  • B. Historical Context
  • C. Causes of the Market Failure
    • 1. Introduction
    • 2. Agency Costs
    • 3. Bubble Atmosphere
    • 4. Gatekeeper Failure
  • D. Brief Account of Regulations
    • 1. Introduction
    • 2. Scope of Application
    • 3. Regulations
      • a. Internal Monitoring
      • b. Gatekeeper Regulation
      • c. Regulation of Insider Misconduct
    • 4. Increase in Financial Disclosure
    • 5. Fraud Liability
  • E. Evaluation of SOX
    • 1. Introduction
    • 2. Effectiveness of Regulations
      • a. Independent Directors
      • b. Whistleblowers
      • c. Gatekeeper Regulations
      • d. Increased Disclosure
      • e. Increased Liability
    • 3. Higher Costs
      • a. Agency Costs
      • b. The Effect of Stricter Liability
      • c. Information Costs
    • 4. Conclusion
• IV. WHY COMPLY-OR-EXPLAIN REASONS BEHIND THE SPATE OF INCORPORATIONS
  • A. Introduction
  • B. Reasons for Substantive Regulation
  • C. Advantages of Self-Regulation
    • 1. The Theory of Free Markets
    • 2. Free Markets in the Common Law World
    • 3. Evaluation of the Principle-Based Approach in the light of the Free-Market Theory
      • a. Flexibility
      • b. Investor Education
      • c. Considering New Zealand Circumstances
      • d. Comply-or-Explain in New Zealand
• V. SUMMARY AND CONCLUDING REMARKS

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper aims to evaluate the proposal of imitating the US model of corporate governance, specifically the Sarbanes-Oxley Act 2002 (SOX), in New Zealand. The paper focuses on comparing the strict rule-based approach of SOX with the more principle-based approach employed in New Zealand. It examines the effectiveness and drawbacks of each approach, considering factors such as investor confidence, fraud prevention, and the role of free markets.

• Corporate Governance in New Zealand and the US
• The Sarbanes-Oxley Act 2002 (SOX)
• Rule-Based vs. Principle-Based Approaches to Corporate Governance
• The Role of Free Markets in Corporate Governance
• Investor Protection and Confidence

Zusammenfassung der Kapitel (Chapter Summaries)

Section II provides an overview of corporate governance regulations currently in place in New Zealand, highlighting the dominant role of small to medium-sized companies and focusing on listed public companies. It addresses potential shortfalls in the current framework. Section III delves into the Sarbanes-Oxley Act 2002 (SOX) and its provisions, analyzing major fraud scandals in the USA and discussing the effectiveness of SOX in achieving fraud prevention. It concludes that SOX has numerous drawbacks and fails to effectively prevent fraud. Section IV explores the advantages and disadvantages of a principle-based approach to corporate governance regulation, advocating for the efficiency of free, unregulated markets and highlighting the importance of a strong legal framework in investor protection. It discusses the "comply-or-explain" model employed in New Zealand.

Schlüsselwörter (Keywords)

The paper focuses on corporate governance, particularly examining the contrasting approaches of codification (SOX) and self-regulation in New Zealand. Key themes include investor protection, fraud prevention, free markets, the separation of ownership and control, agency costs, and the effectiveness of different regulatory frameworks. The paper also considers the influence of the Enron scandal and the role of gatekeepers in corporate governance.