Pajamas Media Blog Week in Review on the ISG and why Sarbanes Oxely sucks

The 27th edition of Pajamas Media Blog Week in Review is up and this time moderator Austin Bay is joined by Intapundit's Glenn Reynolds and blogger/radio host Tammy Bruce. The first topic of discussion is the recently-released Iraq Study Group report. Neither panelist is pleased by what's in it.

The second topic the group tackles is the increasing unattractiveness of New York, meaning of course America, as a place for initial public stock offerings. They cite this December 4 Wall Street Journal OpinionJournal article by John Fund.

From that story:

Increasingly, Hong Kong and London are the places where companies are finding it easier and cheaper to list their shares and raise capital. Last year, of the 25 largest initial public offerings in the world, only one took place in America. This year, Hong Kong is likely to end up as the No. 1 market for stock offerings world-wide.

Perhaps the top culprit in New York's relative decline as a trading center is the Sarbanes-Oxley corporate accountability rules that were put in place in 2002 in the wake of the Enron and WorldCom scandals. Henry Tang, Hong Kong's financial secretary, couldn't be more blunt on the good fortune Sarbanes-Oxley has brought his city. "Our success is giving [Treasury Secretary] Hank Paulson a few raised eyebrows," he told a delegation from the Fraser Institute, a Canadian free-market think tank, last week. "Thank you, Mr. Sarbanes and Mr. Oxley," he said, referring to Democratic Sen. Paul Sarbanes and GOP Rep. Mike Oxley, the law's chief sponsors.

While some of Sarbox's rules make sense, its Section 404 has had unintended and damaging consequences. Section 404 requires corporate executives to certify their financial statements and internal controls personally. Audit fees for Fortune 1000 companies have more than doubled on average. Worse, the rigid and cumbersome rules are driving away business without significantly improving corporate governance. "Managers are increasingly losing their appetite for risk and innovation," says Hank Greenberg, former chairman of the insurance giant AIG.

As with the Iraq Study Group report, Tammy and Glenn dislike "Sarbox." And I agree with them.

The podcast is sponsored by Volvo Cars US, and is produced by fellow Pajamas blogger Ed Driscoll.

Free Pajamas Media Blog Week in Review subscriptions are available at the iTunes web site.

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