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Sunday, April 3, 2005; Page F03

Corporate executives and industry trade groups are spending a lot of time these days saying the corporate governance pendulum has swung too far in the direction of reform following the collapse of Enron Corp. and WorldCom Inc. But in a new book, Icarus in the Boardroom (Oxford University Press), University of Pennsylvania law professor David Skeel argues that the 2002 Sarbanes-Oxley Act has done little to rein in the excessive risk-taking that characterized the late 1990s boom years. Skeel contends that executive compensation and hiring practices still provide ample incentive for cooking the books -- and that regulators now put too much focus on finding "independent" board members to monitor the coffers when some of the era's biggest corporate blowups took place on the watch of seemingly independent directors. Skeel's suggestion that the stock exchanges assign auditors to help sever their overly cozy ties to corporate clients may be far-fetched given the exchanges' own governance problems. But the book convincingly highlights deep problems yet to be resolved with the current system of investor protection.

-- Carrie Johnson

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