“One year after the Sarbanes-Oxley Act was signed into law, the bill’s two main authors agree that the legislation is helping to restore investor confidence and deter fraud with the threat of stiffer penalties,” writes Deborah Solomon in today’s Wall Street Journal.

“But while Rep. Michael G. Oxley, a Republican from Ohio, jokes that people think his first name is Sarbanes, the two congressmen linked by the corporate-overhaul legislation aren’t always of the same mindset when it comes to gauging the legislation’s impact.”

“Mr. Oxley said he is concerned the legislation has produced some unintended consequences, such as making companies risk averse and ‘extra cautious’ for fear of tripping provisions in the law. He is worried the new law has sparked an increase in corporate risk aversion, thereby hurting the economy.”

“Sen. Paul Sarbanes, a Democrat from Maryland who co-sponsored the legislation, doesn’t agree. He said he thinks the rules are forcing companies to clean up their acts and the unintended consequences are ‘not as many as many people feared.’ “

“Risk aversion, he said, is good in some cases. ‘Those that play fast and loose ought to change their ways,’ he said.”

“That the bill’s authors would take differing views isn’t that surprising, given the history of the legislation. The sweeping corporate-governance package was pushed through Congress at a rapid pace last summer as investor losses mounted in the wake of financial fraud at some of the nation’s largest companies. But the House and Senate bills were very different pieces of legislation and it took intense negotiation before a compromise was eventually reached.”

“The House bill, which passed before WorldCom’s multibillion-dollar fraud came to light, was criticized by Democrats as being too weak, in part because it called for the SEC to control the accounting oversight board. Consumer groups feared the House bill would allow accounting interests to pull the strings and that much-needed reform wouldn’t materialize.”

“The Senate bill was viewed by Republicans as too conditional and granting too much authority to an independent accounting board. A stalemate on the two bills seemed likely in early July until Mr. Oxley and other House Republicans agreed to compromise. President Bush had also made it clear he wanted to sign the final bill before the summer 2002 recesses.”

“The final legislation spurred a host of new rules requiring more independent audit committees, restrictions on executive loans and auditors who do more than just rubber-stamp financial results. It also created the independent Public Company Accounting Oversight Board, something both congressmen point to as a hallmark of the legislation.”