Five years ago, the Dodd-Frank Act imposed new rules governing everything from derivatives trades and mortgage lending to disclosures about executive compensation and conflict mineral usage. With many of those regulations now in place, are corporate executives doing a better job of promoting a culture of compliance?
“Compliance really starts at the top, no matter what regulatory regime you put into place,” says Charles Elson, head of the Weinberg Center for Corporate Governance at the University of Delaware. The trouble is that measuring tone at the top is notoriously difficult. Almost every business—including everyone’s favorite example, Enron—says the right thing on paper, via a code of conduct or business ethics, regardless of what ethical train wrecks might be happening in the real world. And positive actions such as honesty, transparency, and integrity are almost impossible for outsiders to gauge.
