Acutally, it would shift investing from people investing directly in a company, to investing with mutual funds or just depositing their money in banks. Investment won't dry up, it will just move and place new buffers between people and their investments. Mutual funds will adopt the risk and will exercise more control over their investments and possibly bring about a better style of corporate governance where "profit at all expense" will be replaced with "profit, but do it right".
People invested in business before the corporate form existed, and they will continue to invest in business if it disappears. Partnerships of varying types existed and even limited liability partnerships would work as well. I just think it is bad policy to remove shareholders so far from corporate governance that the ethics of governance are ignored in favor of extreme profit.
I wasn't totally clear in my meaning with my post. I don't mean that the substantive law of SOX is what totally stops crime. It is more a public perception issue. SOX closed a perceived hole. Of course, requiring company officers to sign off on accounting statements is a Good Thing.
Concerning your "do you even know what enron did wrong" accusation: Enron got into trouble when they were certified to use the Mark-To-Market Accounting method (rather than Cash or Accural Accounting methods). Now, Mark-To-Market is fine for selling fungible goods (which Enron originally did. They started as a natural gas clearinghouse), but eventually Enron was using it when selling services or non-fungible goods and that just doesn't work right. It opened a hole whereby they could record revenue on their financial statement for the present when they wouldn't necessarily be earning that revenue for years. It was all based on projections. The problem occured when Enron started projecting higher revenues for its projects (like the Indian Power Plant) that never met those numbers. After a while of this, they had a ton of unreached revenue numbers (which became debt) that they hid by having Fastow sell off the debt to other companies that he created for that express purpose.
Enron is bad because Skilling and later Lay claimed to never know what Fastow was doing with the debt. Of course they knew, but there was no proof that they knew. One of the provisions of SOX is that the CEO and other responsible officers (as well as some boardmembers, I believe) now ABSOLUTELY have to sign off on the financial statements. If such a signature existed for Enron, there would be no long drawn out trial for Skilling and Lay because the case would have been a slam dunk (as it is, their defense is "Fastow did all that, we didn't know!")
So, yeah, I know what Enron did wrong, and I know how SOX seeks to fix that and other problems brought up by Worldcom and Tyco not to mention that absolute corruption of Arthur Andersen and the accounting practices that were allowed.
It most definitely is a good thing. Another way to think about SOX is this way:
Enron, Tyco, Worldcom all used fraudulant accounting methods to inflate their books. If SOX hadn't been passed two things would've happened. First, investor confidence in the entire system would have collapsed. People would've started pulling their money out because, after Enron, a huge loophole in the system was found and all of a sudden no company with profit would have been considered safe. Second, every company in the US now knew of these "unique" accounting practices that could instanteously increase their profit margin. I'm not saying that all corporations would do this, but a sizable percentage would, especially if they perceived that there were low risk (remember, it took over 5 years to bring the Enron Executives to court).
It's like whenever a new exploit in a piece of software is found. Once it's existance becomes widespread, every scriptkiddie in the world starts to attempt to exploit it. Some people may not like it, but SOX is the patch to that exploit. Now, it has some bad side effects, but still those side effects aren't as bad as having the old loophole.
Quick note. Limited Liability afforded by corporate status doesn't protect the officers, it protects the owners (shareholders) from liability.
However, I don't necessarily think that eliminating the corporate form is bad. I think it runs counter to a true free market (because corporations by design work to restrict real information about the marketplace). Combined together, I think that the Corporate Form and the increasingly unregulated markets (notice I didn't say "Free") that we have will eventually end with a severely weakened governmental system and a rise of corporate systems to fill the power gap. Then we will have a new beginning of Fedualism.
I'm willing to bet money that after the news of the Sony fiasco hit the airwaves, CD buying decreased overall. Think about it, the average consumer probably doesn't pay attention to which musician is on which label and following Sony's Rootkit Extravaganza probably stopped buying all CDs.
And, of course, the Wall Street Journal blames piracy. Right....
Douglas Adams once wrote "Proof Denies Faith". Although he wrote that as a joke, I think that the concept is very real. If you spend your time looking for the historical Jesus, that is time you are not studying his teachings and attempting to apply them in your life (all of his teachings I might add, not picking and choosing those that feel good).
I'm not a religious person, but it seems to me that for people looking towards Jesus with their faith, the Shroud of Turin (and other artifacts I may not know about) are a detour. They are like situational comedy on television.... just empty calories. Nothing of substance is there that will help you with your faith.
For me the really interesting thing is that disputing the authenticity of the Shroud does not in any way speak to the authenticity of any form of Christianity. I don't understand why Christians keep making the Shroud of Turin a issue. It was a fake made by French Priests in the 14th Century to scare the hell out of their parishioners. It's called the Shroud of Turin. Turin is the area in FRANCE where it was "discovered" and has no particular relevance to Jesus Christ. If this article of cloth is his burial shroud, why isn't it called the Shroud of Christ?
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People invested in business before the corporate form existed, and they will continue to invest in business if it disappears. Partnerships of varying types existed and even limited liability partnerships would work as well. I just think it is bad policy to remove shareholders so far from corporate governance that the ethics of governance are ignored in favor of extreme profit.
Concerning your "do you even know what enron did wrong" accusation: Enron got into trouble when they were certified to use the Mark-To-Market Accounting method (rather than Cash or Accural Accounting methods). Now, Mark-To-Market is fine for selling fungible goods (which Enron originally did. They started as a natural gas clearinghouse), but eventually Enron was using it when selling services or non-fungible goods and that just doesn't work right. It opened a hole whereby they could record revenue on their financial statement for the present when they wouldn't necessarily be earning that revenue for years. It was all based on projections. The problem occured when Enron started projecting higher revenues for its projects (like the Indian Power Plant) that never met those numbers. After a while of this, they had a ton of unreached revenue numbers (which became debt) that they hid by having Fastow sell off the debt to other companies that he created for that express purpose.
Enron is bad because Skilling and later Lay claimed to never know what Fastow was doing with the debt. Of course they knew, but there was no proof that they knew. One of the provisions of SOX is that the CEO and other responsible officers (as well as some boardmembers, I believe) now ABSOLUTELY have to sign off on the financial statements. If such a signature existed for Enron, there would be no long drawn out trial for Skilling and Lay because the case would have been a slam dunk (as it is, their defense is "Fastow did all that, we didn't know!")
So, yeah, I know what Enron did wrong, and I know how SOX seeks to fix that and other problems brought up by Worldcom and Tyco not to mention that absolute corruption of Arthur Andersen and the accounting practices that were allowed.
You point to Warren Buffett as indicitive of the average investor? He isn't. That's why he's "Warren Buffet".
Enron, Tyco, Worldcom all used fraudulant accounting methods to inflate their books. If SOX hadn't been passed two things would've happened. First, investor confidence in the entire system would have collapsed. People would've started pulling their money out because, after Enron, a huge loophole in the system was found and all of a sudden no company with profit would have been considered safe. Second, every company in the US now knew of these "unique" accounting practices that could instanteously increase their profit margin. I'm not saying that all corporations would do this, but a sizable percentage would, especially if they perceived that there were low risk (remember, it took over 5 years to bring the Enron Executives to court).
It's like whenever a new exploit in a piece of software is found. Once it's existance becomes widespread, every scriptkiddie in the world starts to attempt to exploit it. Some people may not like it, but SOX is the patch to that exploit. Now, it has some bad side effects, but still those side effects aren't as bad as having the old loophole.
However, I don't necessarily think that eliminating the corporate form is bad. I think it runs counter to a true free market (because corporations by design work to restrict real information about the marketplace). Combined together, I think that the Corporate Form and the increasingly unregulated markets (notice I didn't say "Free") that we have will eventually end with a severely weakened governmental system and a rise of corporate systems to fill the power gap. Then we will have a new beginning of Fedualism.
I'm willing to bet money that after the news of the Sony fiasco hit the airwaves, CD buying decreased overall. Think about it, the average consumer probably doesn't pay attention to which musician is on which label and following Sony's Rootkit Extravaganza probably stopped buying all CDs.
And, of course, the Wall Street Journal blames piracy. Right....
Douglas Adams once wrote "Proof Denies Faith". Although he wrote that as a joke, I think that the concept is very real. If you spend your time looking for the historical Jesus, that is time you are not studying his teachings and attempting to apply them in your life (all of his teachings I might add, not picking and choosing those that feel good).
I'm not a religious person, but it seems to me that for people looking towards Jesus with their faith, the Shroud of Turin (and other artifacts I may not know about) are a detour. They are like situational comedy on television.... just empty calories. Nothing of substance is there that will help you with your faith.
Ok, Italy, not France. My bad. Still, what is more important? Purported artifacts of Christ or the teachings of Christ?
It's fake... stop using it as a crutch.