Two-thirds of senior financial executives in U.S. public companies believe that the Sarbanes-Oxley corporate-disclosure law and concerns about higher director liability has made it more difficult to find qualified directors to serve on boards.
But while public companies have been having problems recruiting directors, a survey commissioned by Grant Thornton LLP found that more than three quarters of privately-held companies have not experienced the same difficulties.
This huge discrepancy highlights the fact that most privately held companies do not face the regulatory oversight that their publicly held counterparts do, or the threat of class-action shareholder lawsuits.
"The SME company looks at these type of regulatory matters as something not for them," said Brian Chernett, Managing Director of The Academy for Chief Executives.
"They have much more interest and concern with the HR regulations that continue to bombard them and are starting to adversely affect the personal relationships with their people."
The survey also found that almost eight out of 10 chief financial officers and other senior financial executives want greater transparency in financial reporting and a comprehensive revenue-recognition statement.
They also overwhelmingly support uniform global accounting standards and a principle-based approach to accounting standards.
Almost nine out of 10 (89 per cent) support adoption of a principles-based approach to accounting standards, a similar proportion (85 per cent) of CFOs favour uniform global accounting standards and 79 per cent think the current reporting model needs to be updated.
"Sarbanes-Oxley was a needed watershed event in corporate governance, but along with the greater protection of investors, there are increased time requirements for directors," says Ed Nusbaum, CEO of Grant Thornton LLP.
"But an even greater obstacle is the fear of litigation."