American regulators have over-reacted to the accounting scandals of the past three years and are threatening the competitiveness of U.S. companies, according to John Devine, chief financial officer of General Motors.
In an interview at the Geneva motor show, the finance head of the world's largest vehicle manufacturer warned that companies were focusing on complying with financial rules at the expense of their core business.
"You will find companies climbing into a foxhole and hiding rather than trying to be competitive in the marketplace," he said. "I don't think it is good for consumers, for the companies or for the countries involved. The pendulum has swung too far."
Mr. Devine is the latest senior U.S. executive to lash out at the plethora of new corporate governance and financial disclosure rules, which began with the Sarbanes-Oxley disclosure legislation two years ago in the wake of the Enron and Andersen collapses.
In a survey last summer, 60 percent of chief financial officers at U.S. multinationals polled said they thought that corporate governance reform had gone too far.
Even William Donaldson, chairman of the Securities and Exchange Commission, has expressed concern that the wave of reforms is stifling risk-taking.
An increasing number of executives have hit out at the cost of compliance with the new regulations. Scott McNealy, chief executive of Sun Microsystems, the computer group, complained that executives had had to "spend massive amounts of time executing on the rigmarole around Sarbanes-Oxley and [this] came out of shareholder's pockets".
Mr. Devine's warning indicates how concerned corporate America is becoming at the danger of losing competitive advantage to less heavily regulated companies, particularly those in Asia.
"I'm not saying there shouldn't be any reaction to the abuses but we frequently go overboard," he said. "That can result in reduced competitive position."
Mr. Devine focused his criticism on the Sarbanes-Oxley legislation, which is designed to make accounts more accurate, with the chief executive and finance director required to take personal responsibility for the annual regulatory filing.
But as one of the biggest bond issuers in the world, as well as a major investor through its pension fund, GM also has a close interest in the effects of the clampdown on Wall Street investment banks.
Mr. Devine said the Sarbanes-Oxley legislation would make it less likely that private companies would seek to list in the U.S., potentially restricting their access to capital for growth.
"If you were a private company contemplating going public you would certainly think twice about it now," he said.
Some non-US companies have cited Sarbanes-Oxley as one reason why they decided against listing in New York.
