Can the US Import “Sunlight” from New Zealand?: An Assessment of New Zealand’s Model for Corporate Financial Disclosure

Prepared by Jonathan F. Karp, August 2011

with funding from the sponsors of the Ian Axford (New Zealand) Fellowships in Public Policy

About the author

Jonathan Karp is Branch Chief for Analytics at the US Securities and Exchange Commission in Washington, DC. He specializes in using information technology to improve the delivery of government services to the public.

During Jonathan’s Ian Axford Fellowship exchange to New Zealand he was based at the Companies Office in Auckland, where he researched New Zealand’s model for corporate financial disclosure. He also spent time with the New Zealand Securities Commission in Wellington during its transition to the Financial Markets Authority.

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Abstract

The New Zealand Companies Office requires businesses to disclose certain details of their operations to the public in order to curb financial abuses and facilitate economic development. In the US, the Securities and Exchange Commission operates a similar kind of corporate disclosure program to shine “sunlight” on corporate activity. This report examines several elements of New Zealand’s model for corporate financial disclosure and assesses the desirability of adopting those elements in the US regulatory regime.

The report outlines major issues facing US disclosure operations and outlines reasons for US policy makers to consider approaches taken by New Zealand. The report then investigates those approaches, including (1) a service-oriented organizational design separated in a systematic manner from legal policy work and enforcement work, (2) a self-funded financial structure based on the “user pays” principle, and (3) an information technology architecture based on principles of design transparency, data interoperability, code standardization and functional reusability.

The report examines these areas in some detail and then assesses certain risks that New Zealand may face with its particular model. Based on this assessment, the report then concludes by laying out specific recommendations for improvements in US corporate financial disclosure operations.

Table of contents

Acknowledgements
Executive Summary
Preface
Introduction

1. The Challenge Of Sunlight
2. Why Should The Us Look To New Zealand?
3. Organisational Design
4. Financial Structure
5. Technology Highlights
6. Risks In The New Zealand Model

Conclusion And Recommendations
Bibliography
Appendix A: Highlights In The History Of New Zealand’s Corporate Financial Disclosure Operation

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