Neoliberalism, deregulation and Sarbanes‐Oxley: The legitimation of a failed corporate governance model

Barbara D. Merino (University of North Texas, Denton, Texas, USA)
Alan G. Mayper (University of North Texas, Denton, Texas, USA)
Thomas D. Tolleson (Texas Wesleyan University, Fort Worth, Texas, USA)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Publication date: 3 August 2010



The paper aims to use a neoliberal ideology to frame an analysis of how the power of ideas can be used to maintain a failed corporate governance model based on stockholder primacy.


The paper employs the concept of corporate hegemony to provide an understanding of the conditioning environment in the USA in the 1990s. It examines the tactics that neoliberals used to gain consensus for their ideology and to skillfully deflect criticism in the face of significant policy failures that have had a global impact.


The paper highlights the power of ideology to create a desired outcome. It finds that Sarbanes‐Oxley represented a neoliberal victory in that it legitimated shareholder primacy and continued use of a failed corporate governance model.

Practical implications

Sarbanes‐Oxley did not address the systemic problems associated with deregulation; it will not resolve the basic problem of how to prevent corporate malfeasance in an economic environment that rewards arbitrage capitalism, high risk and a focus on short‐term profits.


If shareholder primacy weakens accountability, as the paper suggests, then accounting researchers need to develop models that focus on deregulation rather than on regulatory capture and the use of state power to promote private interests. Accounting academics need to assume the role of public intellectuals and to reject Milton Friedman's focus on negative freedom as the sole objective of economic activity and examine economic well being in terms of positive freedom.



Merino, B.D., Mayper, A.G. and Tolleson, T.D. (2010), "Neoliberalism, deregulation and Sarbanes‐Oxley: The legitimation of a failed corporate governance model", Accounting, Auditing & Accountability Journal, Vol. 23 No. 6, pp. 774-792.

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