OP-ED: Like war reports, Sarbanes-Oxley doesn't help us see the big picture

One of the lessons we've learned from having journalists embedded in the field during the war in Iraq is that the center of the war always seems to be where that particular journalist happens to be standing at the time. We hear tracer bullets whiz by and see explosions in the background shake the camera, capturing a footnote of our nation at war. But this does not provide the big picture of what the war is about.

One of the lessons we've learned from having journalists embedded in the field during the war in Iraq is that the center of the war always seems to be where that particular journalist happens to be standing at the time. We hear tracer bullets whiz by and see explosions in the background shake the camera, capturing a footnote of our nation at war. But this does not provide the big picture of what the war is about.

The analogy applies as well to the furor in our industry of late over the fallout from the Sarbanes-Oxley Act, which codifies long-standing SEC guidelines and provides for more accurate and candid public disclosure of finances in public companies. First into the fray in our industry appear to be the giant advertising and PR holding companies that declared they no longer will provide detailed breakouts of financial results for individual subsidiaries. Why communications companies, which prosper at the knee of the First Amendment? Because their lawyers advised them, not their communicators, that such reporting might not comply with Sarbanes-Oxley requirements. Let us not lose sight of the pivotal issue: Sarbanes-Oxley was enacted to create more openness and candor from American corporations, not less. Key segments of our profession seem to bog down in arguments over whether PR and ad agencies will have bragging rights about their revenues, whether industry trade publications will have uniform measurements for agency rankings and awards, or whether those seeking agency representation will have a quick "top 10" list of prospects to contact with RFPs. The PRSA worries about more serious implications of all public and private organizations ducking salvos of overly cautious legal interpretation of Sarbanes-Oxley. At stake is the credibility of all the nation's public corporations, not just a few collateral issues related to our profession. The PRSA represents some 20,000 communications professionals from a wide variety of business, private, and government organizations. That puts us in a position to influence the actions of others to openly discourage them from scurrying behind manufactured fears of potential liability simply to avoid doing what is right. Historically, holding companies and large corporations have declined to report revenues of subsidiaries and independent business units for a variety of reasons. Unfortunately, one of those reasons has been to avoid exposure of their off-balance sheet and their under-performing properties, which ultimately is a disservice to stockholders and other stakeholders. In our industry, holding companies have historically gone against the grain and allowed their subsidiaries to disclose financial performance - good or bad. We always admired these companies for their candor. Ironically, now that we have a law to strengthen requirements for honest, good-faith financial projections, the same holding companies now say they fear repercussions if they report actual performance numbers from a previous year. Now, we wonder, weren't we reading "actual" performance numbers before Sarbanes-Oxley? While some "unnamed" PR agency heads have been quoted as blaming corporate lawyers for this sudden lack of candor, this in itself adds to the problem. It allows those who take potshots at the industry to make a cynical leap and suggest many of those executives may be actually sighing with relief that they have a convenient means to avoid acknowledging the numbers publicly. Are these the same executives who are encouraging clients to comply with the wave of candor related to transparency and corporate social responsibility? We are just not sure if we should describe this situation as irony or paradox. The danger we face in this debate is that we render legal cautions as sacrosanct dictum, and pay too much homage to the old notion that, in a debate focusing on the spirit versus the letter of the law, it is fruitless to argue in favor of the philosophical underpinnings of the law. Credibility remains an essential tenet of the PR profession, and if we have to fight those who advise secrecy, well, it certainly won't be the first time PR has taken on lawyers.
  • Reed Bolton Byrum is president and CEO of the Public Relations Society of America.

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