A third priority for [Chairman Cox's] agenda is fair, transparent financial reporting, which is critical in evaluating whether a company is a good investment opportunity. Expensing of employee options is one example, and Chairman Cox told Senators that he respected the independence of the Financial Accounting Standards Board, which sets accounting rules, and, further, thought 'the FASB rule that will force companies to treat stock options granted employees as an expense is an issue already decided'. His message was a good first step to show investors he will act in their interests.

Other disclosure issues, however, must be addressed, to bring 'on' the balance sheet many off-balance-sheet items that make it hard for financial analysts to assess a company's liabilities and assets. A starting point, here, is a recent report by the SEC staff, as required by the Sarbanes-Oxley Act. The recommendations included reforms to discourage companies from structuring transactions merely to obtain off-balance-sheet accounting.