Should the "burden" of Sarbanes-Oxley be eased for non-U.S. companies?

The blog I posted just a few minutes ago, responding to the report by Jeremy Grant in today's FT, according to which the US Chamber of Commerce (USCC) will today call for an end to quarterly earnings guidance from companies, makes one other proposal that is worth at least brief reflection.

This second proposal is that the Securities and Exchange Commission (SEC) be allowed to ease the burden of Sarbanes-Oxley (SOX) on foreign companies.

I have not read the actual call yet, since it has not yet been released by the USCC.

However, it seems to me a little strange if the USCC has really called for the "burden" of SOX to be eased for non-U.S. companies, but not for U.S. companies.

How does this contribute to a level playing field?

And how come the USCC wants a tougher regulatory regime for its own "home" members than it does for "foreign" companies?!

Something fishy here....

It may be worth recollecting that the rough hammer of SOX was introduced in the hot emotion of immediate response to Enron and other disasters. While it makes sense to re-think SOX in the cold light of day, that rethinking needs to be done in such a way as to produce:

(1) a regulatory that is light but effective (all the suggestions that I have seen at present are focused on being light, but rather less focused on being effective)

2) a level playing field for U.S. and non-U.S. companies.

When the USCC comes up with a sensible suggestion that meets these two criteria, I will be happy to support that. Sphere: Related Content

Ending Quarterly Earnings Guidance?

According to a report today in the FT by Jeremy Grant ("US reform sought to aid capital markets"), the US Chamber of Commerce will call today for an end to quarterly earnings guidance from companies.

This is eminently sensible on classical grounds as well as more modern ones.

The classical grounds are there is no logic to "quarterly" guidance since a "quarter of a year" relates to no natural period of time. "Annual guidance" makes sense because it does relate to a significant natural division of time.

So why not "monthly guidance? Or "daily guidance"? Well, anything less than annual guidance encourages short-termism in a marketplace that is already short-term enough.

The modern grounds are that most traders already have enough information, even on a moment-by-moment basis to adjust their investment behaviour (rightly or wrongly), so quarterly guidance merely adds effort and expense for hard-worked Chief Executives and Investment Relations teams, and produces little or no benefit for companies in terms of Return on the Investment made. In other words, if all companies were prohibited from producing anything other than annual guidance, then money, time and effor could be put into more productive activities instead.

What has taken the US Chamber of Commerce so long to wake up to these elementary matters?
. Sphere: Related Content