Discussion of a Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002

President Roosevelt allegedly issued this quip after having engaged in a lengthy exchange with a visiting business delegation. While the story (true or not) may be apocryphal, it illuminates a fundamental confusion that surrounds lobbying: What is it? How does it work? And when is it used? Some believe that the legislative process in this and many other countries could not function without it. In a fascinating study of lobbying activity during and following the passage of the Sarbanes-Oxley Act of 2002 (SOX), Hochberg, Sapienza, and Vissing-Jorgensen [2009] (HSVJ) uncover noteworthy patterns in the behavior of investors and corporate insiders toward influencing the rules to be implemented under SOX by the Securities and Exchange Commission (SEC).