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It is argued that the Sarbanes-Oxley Act of 2002 (SOX) has had a negative impact on corporate performance. While regulation of substantive issues of corporate governance was formerly left solely to states, SOX gives the federal government unprecedented jurisdiction over substantive issues in corporate governance, beyond its former role in regulating disclosure. Research suggests that the SOX requirement of audits to be performed by independent directors does not improve performance and may not lessen misconduct. There is only limited evidence that banning auditing firms from providing non-audit services to their audited firms improves audit quality. Other studies, concerning SOX regulation of executive loans and executive certification, provide limited support for the law's effectiveness. The congressional history of the bill is examined, with the suggestions that debate was limited, that its passage was encouraged by political considerations, and that many of its provisions originated from individuals tied to the Securities and Exchange Commission (SEC). Finally, while SOX may not be effective in achieving its ends, it also creates substantial compliance costs.

Confidential voting in corporate proxies is a principal recommendation in activist institutional investors' guidelines for corproate governance reforms. This paper examins the impact of the adoption of confidential corporate proxy voting on proposal outcoms through a panel data set of shareholder and management proposals submitted from 1986-98 to the 130 firms that adopted confidential voting in those years. Institutional investors promoting confidential voting maintain that private sector institutions have conflicts of interest that prevent them from voting against management even though to do so would maximize the value of their shares; they contend that anonymous ballots will enable such investors to vote their true interest, and thereby anticipate reduced support for management proposals and increased support for shareholder proposals. The paper finds, contrary to confidential voting advocates' expectations, that adoption of confidential voting has no significant effect on voting outcomes. voting outcomes are best explained by proposal type; neither institutional nor insider ownership, nor prior performance, significantly affect the level of support a proposal receives. Moreover, the conflict of interest hypothesis is not supported in the data, as private institutional holdings post-adoption of the voting reform do not affect the support level for proposals. Confidential voting also does not affect firm's stock performance. The results suggest that institutional investor initiatives directed at confidential voting are not a fruitful allocation of investors' resources.