Case 1. The Sarbanes-Oxley Act and the New Exchange Listing Standards in U.S.

1.1 Timeline

The SOX was first unveiled in 17 Jan 2002 and it became law in 30 July 2002. Shortly thereafter, the NYSE and NASDAQ proposed new exchange listing rules. The proposals were approved in late 2003 and they went into effect in 2004 and 2005. As early as 1999, NYSE has already required the independence and qualification of the audit members in domestic listed firms.

2001 is the end of the pre-period and 2005 is considered the first year of full compliance. Different papers have different opinion in choosing the key events associated with the passage of SOX and new exchange listing requirements, but most of them agree that market should be fully aware of this event by 25 July 2002 when the congress passed the SOX.

1.2 Sarbanes-Oxley Act vs. NYSE and NASDAQ: commons and differences Five main provisions of the SOX Act:

(1) SOX require CEOs and CFOs to certify firms' financial reports, and demands moretimely and extensive financial disclosures.

(2) SOX require all public companies to establish and maintain an internal control system for financial reporting, and require management to evaluate the effectiveness of these systems in their annual reports.

(3) SOX set more stringent standards for audit committee membership. All members of the audit committee must be independent, and firms must disclose whether at least one member is a financial expert.

(4) CEOs and CFOs must disgorge bonuses and stock-sale profits during any twelve-month period following a financial report that is subsequently restated due to misconduct. Further, executives must report insider trades within two days, rather than within the 10 days.

(5) The Act defines some new criminal offenses and increases criminal penalties attached to existing offenses.

Other provisions of SOX include the setup of the Public Company Accounting Oversight Board (PCAOB), strengthen the independence of auditing firms and the enforcement of the federal securities laws as well as whistle-blower protection. Before SOX, the securities laws did not directly mandate board composition, board size, and director qualification.

Both the NYSE and NASDAQ submitted proposals designed to strengthen the corporate governance of their listed firms in respond to the SOX. Both exchanges will require the following:

(1) Shareholder approval of most equity compensation plans;

(2) A majority of independent directors with no material relationships with the company;

(3) Entirely of independent directors in the compensation and nominating committees;

(4) The audit committee must have a minimum of three members and consist entirely ofindependent directors who are financially literate. One member must be "financial expert" orcompany must disclose why not comply;

(5) Regular meetings of only non-management directors.

NASDAQ rules offer greater flexibility. It allows firms to either (1) have an independent compensation or an independent nominating/governance committee or (2) have a majority of independent directors to perform the corresponding committee duties. This is reasonable since firms listed on NASDAQ are usually smaller firms the compliance cost are more burdensome for which.

Certain entities are exempted from the new rules, including controlled companies, limited partnerships, and companies in bankruptcy, mutual funds, and certain other passive business organizations. Larger firms face more imminent compliance deadlines.

SOX does not specifically require majority-independent boards, it does mandate that the audit committee be composed entirely of independent directors. The new listing requirements of the NYSE and NASDAQ mandate majority-independent boards. The NYSE also requires entirely independent compensation and nominating/governance committees. The NASDAQrules are similar, although more flexible, than the NYSE's.Also, both SOX and exchanges tighten the definition of independence. Firms can select directors that are independent according to regulatory definitions but still unduly influenced by management. Increasingoutsider representation on boards maybe simply ''quack corporate governance''.

Case 2: Gender Quota on Board Representations by Norwegian Parliament

In December 2003, the Norwegian Parliament passed a first-of-its-kind law requiring all public-limited firms to have at least 40% representation of women on their boards of directors by July 2005; at the time women held only 9% of board seats. After voluntary compliance failed, the law became compulsory January 1, 2006, with a two-year transition period. Firms that did not comply by January 2008 would be forced to dissolve. Notices to comply were given to 77 delinquent firms in January 2008, and by April all public limited firms were in compliance with the law.

There are two different forms of limited liability stock companies in Norway. A private limited liability company is an Aksjeselskap, abbreviated AS. A public limited company is an Allmennaksjeselskap, abbreviated ASA. The key differences between the two forms are that ASA firms are much larger (with minimum capital requirements 10 times larger than the requirement for AS firms), require no consent to trade shares, and hence may list shares on a public stock exchange. The other key difference is that only ASAs are subject to the gender quota that is the focus of this article. As described in the introduction, the quota was first passed on a voluntary basis in December 2003, then made mandatory in January 2006, with full compliance required by January 2008. The law specifically states the number of board members by gender and effectively imposes a requirement that firms achieve approximately 40% board representation by women. Specifically, if a firm has two or three members, both sexes should be represented; four or five members, both sexes must have two representatives from each sex; six to eight members, both sexes must have three representatives from each sex; nine members must have four representatives of each sex; and more than nine members must have 40% of each sex.

One difference between Norwegian and U.S. boards is that in Norwegian firms with over 200 employees, the employees have the right to elect one-third of the board. However, the quota rules apply separately to each group of board members. This means a firm cannot pack the employee-elected board with women to avoid appointing shareholder-elected women directors.

Though Norway is similar to the United States and United Kingdom in terms of governance, it differs in its gender and labor policies. Norway has very progressive gender policies, ranking number 3 in the United Nations Gender-Related Development Index of 2008, compared to a rank of 10 for the United Kingdom and 16 for the United States. These policies are evident in the 2008 Norwegian Equal Pay Commission which recommends that new parents get 57 weeks leave (with 80% pay compensation) or 47 weeks (with full compensation) with an equal division into three periods, one for the mother, one for the father, and one for the mother and father to share. Moreover, Norway has one of the highest shares of women in Parliament. Following voluntary party quotas introduced in the 1970s, Norwegian women hold 62% of legislative seats in 2008, compared to the United States with 20% and the United Kingdom with 25%. In light of Norway's progressive stance on gender equality, it is not surprising that it was the first nation to implement such large gender quotas

on corporate boards. It also means that we expect smaller effects from the quota in Norway than we would in another country.