While the clawback provisions studied by CCCY are adopted voluntarily, they are based in, and potentially have
implications for, regulatory initiatives of the U.S. government. Section 304 of the Sarbanes–Oxley act (SOX), adopted in 2002, authorizes the Securities and Exchange Commission to recover bonuses paid to CEOs or CFOs whose financial
statements are restated for reasons of material noncompliance with any financial reporting requirements. Moreover,
Section 954 of the 2010 Dodd–Frank wall street reform and consumer protection act, signed in 2010 and scheduled to take
effect in 2012, also provides for the recovery of erroneously awarded compensation from executives.
Even if the voluntary adoption of clawback provisions is associated with more accurate financial statements for the
voluntary adopters, this does not necessarily imply that mandating such provisions will produce the same outcome. Based
on their findings, CCCY suggest that government-mandated clawback provisions will increase financial statement integrity,
though they stop short of a definitive conclusion. In the remainder of this paper, I discuss some of the issues surrounding
government-mandated clawback provisions in particular, and financial regulation more generally. In Section 2, I discuss the CCCY results in somewhat more detail and offer potential alternative implications. In Section 3, I compare voluntary and involuntary clawback provisions and discuss issues of regulation more generally. I conclude in Section 4.