GLOBAL – US congressman Michael Oxley, co-author of the US Sarbanes-Oxley corporate governance legislation, says institutional investors are “finding their voice” in corporate governance.

Oxley, co-author of the 2002 act which was passed in the wake of financial scandals like Enron, said: “They have enormous influence and I think they are finding their voices that here to fore have not been so strong.

“They are being much more assertive with the boards and although they cannot expect to get everything they want, they have enormous abilities to influence decisions.”

Demand for corporate governance standards is high in Europe as well. “The European investor, in particular the institutional investor, expects certain standards to be met with or without legislation, and I think it an absolutely positive thing.”

Speaking following a speech at a conference organised by the International Corporate Governance Network, Oxley said: “Investors, whether institutional or individual, have the power to sell stocks and so they can stay and fight and try to succeed, and if they don’t they cal always sell their shares.”

He said there was “a worldwide corporate governance problem” – although the proportion of corporate problems was “relatively small”.

But such problems “were so egregious and so reported that I think it left the impression that every corporation was in the same boat”.

Oxley told delegates that he had “mixed views” on Europe, referring to issues like “hostility to cross-border mergers in the banking sector”, but declined to comment on specific episodes.

Oxley also said auditors should not have “cosy relationships” with company management. “If there is an area where that needs separation and this independence, it is this particular area.”

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