The Sarbox Effect: Driving Shareholder Value
Compliance is more than a legal requirement; it's a chance to increase shareholder value. In this whiteboard, two members of Deloitte Consulting LLP map the connection between Sarbanes-Oxley compliance and four ways companies can create value. (CIO Ins
Creating value for shareholders and owners is the ultimate goal for all public companies. And while compliance with the Sarbanes-Oxley Act of 2002 may be a legal requirement, many IT executives arent limiting their work to merely complying with the letter of the law. According to this months CIO Insight/Gartner EXP survey, 51 percent of companies are also attempting to take advantage of Sarbanes-Oxley initiatives to achieve better business performance. But how? Where, amid the legal language of the act, and the hard work of testing and validating financial controls, does the connection lie between Sarbanes-Oxley and building (as opposed to protecting) shareholder value? This whiteboard, developed by Lee Dittmar, Kyle Cheney and other consultants from Deloittes Sarbanes-Oxley practice, shows the way. It focuses on four fundamental areas where shareholder value gets generated: growing revenues, increasing margins, maximizing return on assets and effective governance. Next, within each of these areas, Dittmar and his colleagues have identified specific opportunities for proactive CIOs and their teams to leverage IT specifically implemented for Sarbanes-Oxley compliance to create business value. The whiteboard uses the example of a fictitious company, Existential Chemical, a profitable company with slipping growth levels, but looking to improve growth by taking advantage of its Sarbanes-Oxley compliance work.
The whiteboard is not intended to provide a comprehensive list of all the ways companies can derive shareholder value from their Sarbanes-Oxley compliance efforts. Instead, it highlights four examples of areas that demonstrate real upside potential, and is intended to assist managers in recognizing how regulatory compliance can lead to greater overall business success.