How costly is the Sarbanes Oxley Act? Evidence on the effects of the act on corporate profitability

There is a tidal wave of regulation that is coming down the pipes from the various assorted regulators. There are 3 costs to this regulation to financial firms. The cost of implementing the change, the cost of of running the change and the opportunity cost related to the sum of the previous two costs. And believe you me, after having had about 15 years of experience of looking at regulatory change, they can mount up to a pretty penny. Seriously big pennies and I frequently doubt if this is actually making our lives better and safer. Stick to gold (just half kidding). What I also find very interesting is that these regulations are rarely followed by good costed business cases on the cost/benefits to be achieved. Its almost like an article of faith that more regulation is good. Period. No questions asked. Well, I am again not sure.

With that said, what about SOX? well, here’s a good interesting paper on it. Abstract:

The Sarbanes-Oxley Act (SOX) was intended to protect investors by improving the accuracy and reliability of corporate disclosures. However, critics have argued that the costs of SOX far outweigh its intended benefits. Prior studies based on stock-price reactions to SOX-related events document mixed evidence on the expected impact of SOX. In contrast, we provide evidence on the net realized costs of SOX by examining its impact on operating profitability. We find that average cash flows decline by 1.3 percent of total assets after SOX. These costs are more significant for smaller firms, for more complex firms, and for firms with lower growth opportunities. Annually, these costs range from $6 million for smaller firms to $39 million for larger firms. Further, we document that net SOX-related costs are not limited to one-time expenses associated with internal-control design and implementation. In aggregate, for the 1,428 firms in our sample, these costs amount to about $19 billion per year. Profitability is lower for up to four years post-SOX. To our knowledge, ours are the first estimates of the realized net costs imposed by SOX.

$19 billion per year with profits being impacted for 4 years. And no calculation of the compound nature of regulations which come from hundreds of regulators, in hundreds of markets. It is a heavy burden that society is placing on the financial institutions and I am yet to be convinced on a macro level that this is really thought through.

What a great job!> Head of Tunnelling

I happened to look over the FT website for more news on the gilts problem when my eyes fell on this role:

Thames Water

Delivery of major tunnels to cost, time, quality and HSE targets and contribution to the Leadership and continuous improvement of Capital Delivery.

What is the purpose of this role?
The delivery of major tunnels to cost, time, quality and HSE targets as well as contribution to the leadership and continuous improvement of Capital Delivery.
What makes this role unique?
Technical and Health & Safety complexity is on an international scale for our projects (one is for the deepest and highest pressure tunnels to have ever been constructed). Extremely high criticality of completion on time due to potential infraction proceedings in the UK government by the EU. Extraordinarily high risk of cost overrun requiring robust management to keep the project under control.
What will this role involve?

High level internal and external stakeholder management
Leadership of the delivery team inclusive of 6 direct staff and a project team of approximately 30 mixed direct staff and consultants
Contract and commercial management,  Inspirational people management as part of the extended leadership team, Delivery of projects to time, cost, quality, safety and environmental targets
Active leadership to extend corporate influence for the wider advancement of Capital Delivery, Operations and Thames Water
Responsibility for all major tunnelling projects in Thames Water
What are we looking for?
Excellent commercial acumen
Proven contract management expertise with successful outcomes evidenced
Demonstrable abilities in managing third party contracts at significant scale
Track record of delivering complex projects to cost/time/quality/ HSE standards
Senior manager level leadership, influencing, negotiating and communication skills
A clear leader of people able to deliver tough projects and outputs through inspirational leadership
Proven success at complex tunnel delivery in any sector or other major project success within the water sector i.e. individual projects over £100m

I am sure the job is tough, but to call the job as HEAD of tunnelling is great, he will be the head literally and figuratively I guess :)

Pak court rejects asylum petition for 5 American Muslims

This is what happens when you have countries too closely associated with religion. Take for example, Saudi Arabia and Pakistan or any other OIC country which is all gung ho about Islam. Since Jihad is part of the religion, the argument goes, any bearded terrorist who is looking for jihad can ask for asylum. You couldn't make this up, seriously.

 

LAHORE: A Pakistani court today dismissed a petition seeking asylum in the name of 'holy war' for five American Muslim youths recently arrested in the country for allegedly planning terror attacks, saying that it was not the duty of the judiciary to define 'jihad'.
The Lahore High Court dismissed the petition filed by Khalid Khwaja, a former Inter-Services Intelligence official now associated with a rights organisation. In his petition, Khwaja had contended that the youths came to Pakistan for 'jihad' (holy war) and since this was not a crime, their detention is illegal.

And welcome to ISI inc.. lol

Churches agree to end 'sheep stealing'

This made me go WTF. HT: Ashok Chowgule. And I am quoting from the Union of Catholic Asian News. Fully, before they know what they put up.

BHOPAL, India (UCAN) -- Churches in Madhya Pradesh have agreed to stop poaching each other's members, saying this threatens Christian unity in a state where Christians already face sporadic violence.

Archbishop Leo Cornelio of Bhopal leading 
prayers at the ecumenical gathering

The practice of "sheep stealing" also confuses Christians and helps groups hostile toward them carry out their designs easily, concluded some 100 leaders of various Churches who met Dec. 12 in the state capital, Bhopal.

Archbishop Leo Cornelio of Bhopal, head of the Catholic Church in the central Indian state, chaired the meeting organized by the archdiocese's commission for ecumenism and dialogue.

The prelate urged participants to refrain from trying to attract members of other Churches to their own. This creates divisions among Churches, he noted.

The prelate also appealed for all denominations to refrain from badmouthing one another or other religious communities, especially during preaching, since this violates Christ's teaching of love, harmony and peace.

Asked about the gravity of the "sheep stealing" problem in Madhya Pradesh, Archbishop Cornelio told UCA News that no official survey has been conducted so far, but "it is very visible and threatening to Church unity."

He said there is also a worrying trend of small Church groups suddenly appearing in the state. These preach against other groups and then disappear quickly, leaving "enough fodder for trouble."

He said the main victims of these groups are the mainstream Churches.

Reverend C.D. Singh of the Disciples Church, who attended the meeting, told UCA News that conversion attempts from other denominations were the "biggest challenge" he has faced so far. People keep moving from one Church to another, he noted.

"I went to the Churches where some of my parishioners had joined and I found the prayer services there very effective. So I changed the prayer service in my Church to deter believers from leaving," he said.

Reverend Singh blamed priests and pastors for people changing their Church affiliations. Priests and pastors, he said, should lead exemplary lives and understand their people's spiritual needs. Otherwise they will look for an alternative, he warned.

Church of North India pastor Reverend Timothy Bankhede noted "a dangerous trend" of people setting up small sects and encouraging people to join them.

The Protestant pastor says Churches should work together to fight extremist groups that want to destroy Christianity in the state, instead of creating confusion among their people through the pilfering of followers.

Preaching the Gospel should target people who have not heard Christ's message and not those who are already Christians, he asserted.

Meeting participants agreed to set up a four-member committee to formulate measures to end interdenominational conversions and strengthen ecumenical harmony.

Madhya Pradesh has witnessed many instances of anti-Christian violence since the pro-Hindu ruling Bharatiya Janata Party came to power in the state in December 2003.

Well, its nice to hear that they consider their brethren to be sheep. Lol. Well, i have to be blunt here, anybody who converts is a sheep anyway, from any religion to another other. I am an equal opportunity joker to any convert. They are usually all silly. So its ok to steal souls from Hinduism but not ok to steal souls from other Christian churches? These people are STOOOOPID. MASSIVE FAIL

But check out what the church is doing? But I suppose its better than paedophilia and child abuse which seems to be the lot of the western churches. Goodness, how far the mighty have fallen. This is another reason why I hate organised religion. As soon religion gets organised, all the charlatans and morons seem to pop up in the positions of priestly power.

Why their IT hates our IT

This was quite an interesting article. Go read the full thing.

 

I am very surprised that these Pakistani generals think that corporate FDI is so fickle that it can get negated by bombing the Infosys campus. The network effects, the existing capacity in India all means that its too much invested to remove. And where can you remove the offshoring/outsourcing to? Philippines, Egypt, China all are also facing Islamic terrorism. If they pull it back to UK and USA, oh!, guess what? they are also facing Islamic Terrorism. But then, never expect military officers to know about strategy.

But are the Americans listening? I am afraid not. Here’s a prediction, this problem will not be resolved and will actually will become bigger and bigger the more the Americans rely on the Pakistani Army. Here’s an example, since 9/11 and even before, we knew the problem was the Pakistani Army. Since 9/11, what has the American polity, army and intelligence agencies done to get the Pakistani people on its side and improve democracy? compared to the assistance given to the Pakistani Army? See what I mean? totally disbalanced.

The BNP’s internal inconsistencies

I have been discussing this issue desultorily in a tory group. This issue being the attempts by the BNP to now let non-White people into the political party to avoid the impact of the discrimination act. Anyway, I find it very funny and amusing to read about this. Just the very idea of the BNP trying to recruit non white people to support a party whose policy is to chuck out the said non white people is ferociously funny. This is what I wrote on an email:

This promises to be a most promising sociological and political development but ultimately destined for failure if history is any guide.  I am hard pressed to think of any other historical example where a situation like this has succeeded without changing the home exclusivist party irrevocably. The non whites will be looked as quislings by their fellow group members or mere tokens by others or plain mad.

When the exclusive party really wants to form a broad tent manifesto to really attract more members, it has to spend an extraordinary amount of time and resources. And the move leftward will splinter the party on the right. There are couple of excellent books on this evolution and behavior of extreme parties. Will dig it out sometime.

And then replied to a query about its narrowness:

I am not so sure. Based upon my review of its manifesto, i cannot see any part of the manifesto which is anywhere near the centre or even right or left of centre. The idea behind the concensus is what defines the centre. If one draws a multi dimensional matrix with its social, economic, political and diplomatic policies, it will be several standard deviations to the left (and in some cases, to the right).
Secondly, as I said, the historical evidence suggests that it will remain in the extreme end always if it sticks with its rather interesting policies.
I am also not sure why asian and black citizens would join in. After all, the party actually does not consider them as indigenous (their definition seems to be based upon the level of melanin in their skins, preferably something weird called as white european...). So if blacks and asians do join in, presumably they would do so in the full knowledge that its like turkeys voting for christmas.
I dont think I have come across anybody who is a black/asian who is supporting the bnp based upon this race based immigration policy? They might say that they hate say romanian immigration, but when faced with the rather unhappy logical conclusion that if the BNP does come to power, not only the romanians will stay back (white european race), its the non white population which will be invited to leave. Would love to hear if you have read about anybody who is non white who says so?
And muslims joining the BNP because of afghanistan withdrawal? Hmmm, could you suggest some examples of any muslims who have said so?
But this promises to be quite interesting to see the gymnastics it performs. It is absolutely fascinating to watch.
As I mentioned, I didnt find anything in the historical record, and I went back to check on the journal articles as well as books which would lead me to consider this step to have any chance of broadening the BNP's electroral base without compromising on its basic principles and splintering. The odds are that it will splinter before it went broad based.
Anyway, lets see...

When a Sikh chap announced that he wants to join the BNP, this is what I wrote:

Heh. The inconsistencies just keep on piling up. Reminds of that movie, Mel Gibson and that black fella. Who go to the South African embassy of yore and pointing to the black chap, say that he wants to emigrate to south Africa. The face of the immigration official was priceless. Mr Singh doesn't seem to have twigged to the racial aspect yet.

…..

oh! what I meant was the immigration reviews that the BNP seem to go for are based upon race. No? Its not purely religious so to say. In effect, he is supporting a party which is asking for the voluntary or otherwise repatriation of people like him. As I said, turkeys voting in the affirmative for christmas :)

…..

We are mixing up two things here. 1. Anti Islam feeling and 2. Anti non White immigration.
Any non White fella will fall foul of one or both of these policies. For mr Singh to actually support the first but not the second doesn't really make sense to me.
Why support the first when the result will be immaterial to him as he would be on a plane with the Muslims as well? I know this is a theoritical question but as I said, this is absolutely fascinating :)

It is a pressure group and for what its worth, its working. I am a fervent believer that the state has to be colour blind and in its infinite wisdom, this government has actually given in too much to caring about minorities and not enough about what British means. And I do not consider being British is defined by the colour of skin but the strength of character, history, etc. etc. :)

……..

But it was with some pleasure that I found myself being vindicated to a certain extent. I quote from this site.

Now however, things seem to be coming to a head with the resignations of former contender for the BNP leadership (in a rigged election that he couldn’t possibly win) Chris Jackson (pictured), his former campaign manager Mike Easter and someone named Kev Bryan, who was apparently the Rossendale Branch Organiser. The resignations are announced in an open letter posted on the mostly defunct jackson4leader site:

‘Disbandment of reform Group

What is the point of the BNP if you admit foreigners?

Sadly we have come to the conclusion that the BNP is breaking up and there is no practicable likelihood of it recovering.

In our opinion the root cause of the failure is the Constitution of the Party. The Constitution, that is the Party Rules, makes the Party Leader a dictator. The current leader rather than reforming the Constitution toward that of a normal English association has (probably illegally) made alterations to the Constitution making his removal virtually impossible.

The Party is now a nationalist party in name only and has abandoned many of the fundamental principles on which it was founded.

A further major problem is that of money. Under the Constitution, all money is controlled by the Party Leader. The Party Leader appoints the Party Treasurer and Party Auditor. The Leader has carte blanche to dispose of the funds as he pleases.

This has never been a satisfactory situation, and now that the Party is alleged to be turning over a million pounds a year, is nothing short of a scandal. There have been four different Treasurers this year and the 2008 accounts are way overdue. The Party has been fined by the Electoral Commission for late publication of accounts. This is a re-run of last year when the accounts were also late and when published were endorsed by the Auditor as unsatisfactory.

A separate, but related, issue is the Trafalgar Club. This Club raises money directly to support the Party Leader. No accounts for this club have ever been published and they have not been appended to the Party accounts, as clearly they should be.

We recommend that no further money be sent to ‘Head Office’.

Whilst the BNP has been going downhill, the National Front has reformed itself and now is led by a group of reliable people and has the Constitution of a normal democratic association. Consequently, we believe that BNP members should transfer to the National Front.

Mike Easter
Chris Jackson
Kevin Bryan‘

Some more comments on that site makes for very nice reading. Also check out this site.

What next? Well, the BNP has 2 choices as I mentioned, it has to either move to the right and merge with the National Front. Or it has to move to the centre and thus has to lose its exclusivist racist angle. In either case, its in a horn of a dilemma. The problem with simplistic and frankly intellectually challenged (read idiot) policies is that sooner or later, the holes become too big for even morons to swallow. This is why I am relatively sanguine about this party’s progress. It will be a shame but should be good to provide some more fun and games over the next few months and years.

Bubonic Plague / Ebola / Flesh Eating Bacteria aka Man Flu

I frequently suffer from a whole host of horrible diseases which range from Bubonic Plague, Ebola, Flesh Eating Bacteria, etc. etc. The women in my life, starting from my mum to my wife to my sisters and my little princess call it as Man Flu and dismiss it cruelly, but what do these women know, they are just women, they never fall ill. Only men can understand the gravity of this severe disease. This picture is a fair representation of a terminally ill man:

Look at him, the man is obviously on his last legs. Can you as his significant other ever say no to his miserable crying, bleating and whining? You are supposed to help him, cuddle him, have sex with him, and say, “poor little bunny” frequently while feeding him lots of soup and stuff.

The paramedics obviously have a better handle on things as this video shows:

His tremendousness “Prince of Ligurian” village dies

Words fail me. I just love Italy, its such a great brilliant wonderful country, ever full of surprises. I quote from this story 

A Ligurian man who claimed headlines in recent years by proclaiming independence from Italy and getting himself crowned 'prince' has died at the age of 73. Giorgio Carbone, a former flower grower, was elected to the post by the 364 inhabitants of the apparently sleepy village of Seborga, about 50km inland from the Ligurian Riviera, in 1963. He was known as His Tremendousness Giorgio I and boasted that Seborga was the oldest independent principality in Europe.

The prince made numerous attempts to obtain international recognition for his breakaway principality and launched a separate currency, the 'luigino'. The following year a power struggle arose when a woman calling herself Princess Yasmine von Hohenstaufen Anjou Plantagenet wrote to newly elected Italian President Giorgio Napolitano claiming to be the rightful heir to Seborga's throne.

The Seborgans still have the luigino, which is accepted in the village shops and bars, as well as their own stamps and their own flag - a white cross on a blue background. A sign at the entrance to the village reads 'Principality of Seborga'.

the best part was, he was called as His Tremendousness. What a wonderful evocative name. I want that title!

No religious structures on public land

This was very long overdue and something that every secular Liberal Democracy has to take on board. Keep religion firmly in the private area. You want to worship your god, your pasta, your goddesses or your wood, then you do it in your own time, in your place. I quote:

Stating that state government cannot let “personal faith” eat up public space for fear of provoking religious sentiments, the Supreme Court ruled on Monday that no new constructions of “temples, mosques, churches and gurdwaras will be allowed on public parks, public streets and public spaces.”
“The court is going to be very strict on this ban, even if it gives rise to a law and order problem. We are making it abundantly clear that any fresh construction is banned,” ruled the Bench led by Justices Dalveer Bhandari and A K Patnaik.
“Non-compliance with the order, whatever be the problem within a state, you (state government concerned) will be in great difficulty,” the Bench cautioned a battery of standing counsel representing various state governments.
The Bench also passed a sweeping order that no courts in the country will entertain any complaints against the apex court’s ban, thus closing all avenues for protests by religious groups or private individuals. “Regarding the gravity of the matter, we direct that no order which is inconsistent with our order of ban be passed,” the court ruled.
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“Chief Secretaries must ensure total compliance of our orders, any breach will be viewed seriously by this court,” warned the Bench. The fate of the existing unauthorised structures will be decided on a “case to case basis” by the state governments.
Today’s order follows an earlier ruling passed on September 29, when the apex court had banned construction of unauthorised religious places of worships on public land. The Bench passed the order after finding that the states had hardly taken any action to implement the ban.
The Bench has asked Chief Secretaries to either file affidavits within six weeks swearing that the ban has been implemented in every district of their state, or be present in court with an explanation.

Shame about the Syrian Men

This was amusing.

The Syrian women are the most intelligent and respectable among the world's women," said the state-run Syrian news agency SANA, quoting American and British studies. SANA quoted Professor Katie Bradford, head of a research team at the American Michigan University, as attributing the Syrian women's superior intelligence to the "healthy food they consume, such as olive oil which nourishes the brains and walnuts which preserve blood circulation." According to SANA, Bradford said that "among the most important factors that increased the level of intelligence and awareness of Syrian women is their studies at Syrian universities; the social openness and gender equality in Syria." SANA also said that a study by the British Starch Center for international researches "concluded that Syrian women are the most respectable on world level."

lol. What happened to the Syrian Men? The Syrian Women presumably cook for the Syrian Men and just what are they feeding the men? And no, I am not being sexist, that’s what happens in Arabic households in Syria, if you think that Syrian men are emancipated men, then I have a bridge for sale.