The decline of Congress is a growing problem in U.S. governance, not least the degree to which it writes vague legislation that lets administrative agencies determine the actual law. An egregious example is a bill President Trump is expected to sign soon that would banish Chinese companies from U.S. stock exchanges if they don’t open their external audits to federal regulators.
The 2002 Sarbanes-Oxley Act requires auditors of U.S. publicly listed companies to be registered and regularly reviewed by the Public Company Accounting Oversight Board . This requirement is intended to ensure auditors perform due diligence, though there’s little evidence it has improved audit quality or prevented fraud.
Beijing, however, has cited national security and state-secret laws to block the PCAOB from reviewing auditors, including subsidiaries of the big four U.S. firms, located in mainland China and Hong Kong. The PCAOB has identified 262 non-U.S. companies whose audit work it can’t inspect. Most are based in China, though some are in Belgium and France.
Enter Congress, which unanimously passed legislation that would kick companies off U.S. exchanges in three years if their auditors don’t let the PCAOB review their books. Sponsors Sen. John Kennedy and Rep. Brad Sherman say Chinese companies should have to play by U.S. rules to benefit from our rich and liquid capital markets.
Fair enough, though the bill also advances Beijing’s objective of drawing foreign investors to its exchanges in Hong Kong and Shanghai. U.S. investors will hold and trade shares in Chinese companies like Alibaba regardless of where they are listed. Americans receive more protections when the companies are listed on U.S. exchanges where they are subject to U.S. securities laws.
opinion What’s vague about that?
opinion It’s worse to US.
opinion It looks WSJ lives in the past! Or did you get paid well to show yourself being in the past?
opinion WSJ can youbtell why American business educate third world countries and blacks in urban areas dont get no compensation its always Brooklyn 🤦🏾 bk just a borough that has a lot wealth
opinion Then they must STOP allowing U.S. real estate to be sold to Chinese investors--STOP Bill S.386 proposing an end to country based limits on EB-5 visa for real estate investment--STOP 2021 EB-5's being poised to receive double the visas-benefitting China most!
opinion Things in this country need to change concerning China and their relationships in the US....
opinion Good
opinion Disparity in audit requirements is an old story nicely covered in the 1990s movie, 'The China Hustle.'
opinion Thank goodness we'll still be able to invest in honest American companies like Nikola & GE!
opinion They shouldn't b on there at all.
opinion Too many American investors have been burned by shady chinese accounting shenanigans. They should be banned from American markets. They can list their companies on the Hong Kong exchange now.
opinion good
opinion Interestingly, the new COVID Relief Package similarly has specific provisions to eliminate certain potential borrowers with Chinese ownership interests/affiliates.
opinion Democrats terribly upset that Chinese companies can no longer pillage the American middle class.