Analysis of the Sarbanes-Oxley Act

The Sarbanes-Oxley Act, also known as SOX Act, is a federal law that was passed on July 30, 2002, by Congress. This law was established to help set new or enhance laws for all United States accounting firms, management, and public company. The SOX Act would now make corporate executives accountable for their unethical behavior. This bill was passed due to the action of the Enron and Worldcom scandal, which cost their investors billions of dollars, caused their company to fold, and questioned the nations' securities markets.

Senators Paul Sarbanes and Michael Oxley were the sponsors of the Sarbanes-Oxley Act of 2002, which represented a tremendous change to federal securities law. The act was signed into law by president George W. Bush who described it as “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt1.” After the financial scandals implicating Enron, WorldCom and Global Crossing, the public needed to restore their trust in the public financial statements of the companies and that’s where the SOX Act of 2002 came into place. The act is composed of eleven titles which require numerous reforms to prevent accounting fraud, increase corporate responsibilities, among others.

In the early 2000’s there were a series of financial scandals that took place by large companies such as Enron, Tyco, and WorldCom. The impact of these scandals was significant. Investors lost large amounts of money. Employees of the scandalous companies not only lost their jobs but lost their life savings. The financial scandals that had taken place were so severe that an Act was created in response to them in hopes to prevent these scandals from happening. The Sarbanes-Oxley Act, also referred to as SOX or Sarbanes-Oxley, was created by Senator Paul Sarbanes and Representative Michael Oxley and was signed into law by President George W. Bush on July 30, 2002. The creation and passing of the act was so tremendous that “in the opinion of most observers of securities legislation” Sarbanes-Oxley was “viewed as the most important new law enacted since the passage of the Securities and Exchange Act of 1934” (Ink.com 2008).

The Sarbanes-Oxley Act of 2002 (SOX) was passed by Congress and signed into law by President Bush to “mandate a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud” and applies to all public companies in the U.S., large and small (The Laws That Govern the Securities Industry, 2015). The main purpose of Sarbanes-Oxley is to “eliminate false disclosures” and “prevent undisclosed conflicts of interest between corporations and their analysts, auditors, and attorneys and between corporate directors, officers, and shareholders” (Neghina & Riger, 2009). As a whole, the Sarbanes-Oxley Act is very complex and affected organizations must do their due diligence to ensure they

Prior to the advent of the Sarbanes-Oxley Act of 2002, referred to herein as “SOX,” the board of directors’ pivotal role was to advise senior leaders on the organization’s strategy, business model, and succession planning (Larcker, 2011, p. 3). Additionally, the board had the responsibility for risk management identification and risk mitigation oversight, determining executive benefits, and approval of significant acquisitions (Larcker, 2011, p. 3). Furthermore, for many public organizations, audit committees existed before SOX and provided oversight of internal processes and controls. Melissa Maleske (2012) advised that the roles and responsibilities of the board were viewed “…from a perspective that the board serves management” (p. 2). In contrast, Maleske (2012) noted that SOX regulations altered the landscape “…to a perspective that management is working for the board” (p. 2). SOX expanded not only the duties of the board and the audit committee, but also the authority of these bodies (Maleske, 2012, p. 2).

Sarbanes-Oxley Act of 2002 (SOX), enacted on July 29,2002, is a United States Federal law that imposed new rules and regulations for all US public companies.

The Sarbanes-Oxley Act was enacted in response to a series of high-profile financial scandals that occurred in the early 2000s at companies including Enron, WorldCom and Tyco that rattled investor confidence. The act, drafted by U.S. Congressmen Paul Sarbanes and Michael Oxley, was aimed at improving corporate governance and accountability.

The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. The federal law was made coming off of a number of large corporations involved in scandals. For example a company like Enron was caught in accounting fraud in late 2001 when the company was using false financial statements. Once Enron was caught that had many lawsuits filed against them and had to file for bankruptcy. It was this scandal that played a big part in producing the Sarbanes-Oxley act in 2002.

The Sarbanes-Oxley Act, frequently known as the SOX. The act was passed on in 2002 as a federal United States law. The law was drafted in response to the numerous numbers of financial scandals performed by high profile corporations such as Johnson & Johnson. The action has created a new company standard of responsibility in order to protect the valued stakeholders, as well as the public, from the deceitful practices of various organizations. The Sarbanes-Oxley Act

After a prolonged length of corporate scandals involving big public businesses from 2000 to 2002, the Sarbanes-Oxley Act changed into enacted in July 2002 to restore buyers' self-belief in markets and near loopholes for public groups to defraud traders. The act had a profound effect on company governance within the country. The Sarbanes-Oxley Act requires public groups to bolster audit committees, carry out inner controls assessments, set personal liability of directors and officers for accuracy of financial statements, and enhance disclosure. The Sarbanes-Oxley Act also establishes stricter crook consequences for securities fraud and changes how public accounting companies operate their corporations.

Financial regulation is a critical aspect that helps the stakeholders to ensure that companies present accurate and reliable information to its stakeholders. In Dr. Jasso’s article “Sarbanes-Oxley-Context & Theory”, he addresses the Sarbanes-Oxley Act from a historical and philosophical context, where the firm is depicted by both philosophers which are Aristotle and Adam Smith. They are the leading thinkers on the concept of business and capitalism and how it impacts our society as a whole. Next, Dr. Jasso also examines the problems of market failure and information asymmetry, and he explains how these theories related to the SOX and corporation’s bad behaviors. Lastly, he analyzes the SOA from policy analyst’s perspective. Overall, the author argues that SOX is an effective and good legislation because it is a reactive policy that response to firm’s unethical and bad behaviors such as the accounting fraud on Enron, Adelphia, and Global Crossing. The author also believes that SOX will be continuing benefit the stakeholders such as the investors in the futures, and it will be cultivating good corporate ethical behaviors as well. I think that the

Due too many fraudulent activities in companies such as Enron, WorldCom, and Tyco International consumers became aware that something needed to change. As a result, Congress passed the Sarbanes-Oxley Act (SOX). SOX gave the public and investors a renewed confidence and strengthen corporate governance to insure that companies are reporting their financial information correctly and accurately.

After the demise of Enron due to accounting fraud, the Sarbanes-Oxley (SOX) Act was created by the government to establish penalties for corporate fraud and require companies to have a code of ethics along with transparency accounting for shareholders (Ferrell, Fraedrich, & Ferrell, 2013). In other words, the Sarbanes-Oxley Act provides a set of checks and balances making it more difficult for a corporation to defraud shareholders. The Sarbanes-Oxley Act created the Public Company Oversight Board, which is responsible for monitoring accounting firms and establishing the rules that must be followed (Ferrell, et al, 2013).

Global bribery scandals in the 1970s brought about the first developmental period of codes (Messikomer & Cirka, 2010, p. 57). Later, after the public discomfort towards continuous ethical lapses of major U.S. corporations, the United States Congress enacted the Sarbanes-Oxley Act of 2002 on July 29, 2002. This Act required American companies to reveal whether it has adopted a code of ethics (McCraw, Moffeit, & O’Malley, 2008; Schwartz, 2004). In this Act, the term ‘‘code of ethics’’ referred to written standards that are designed to deter wrongdoing and to promote

The Sarbanes-Oxley Act of 2002 is a United States federal law enacted on 30th July 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox. This law was passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of the affected companies collapsed, shook public confidence in the nation 's securities markets. Named after the sponsors Senator Paul Sarbanes of the Democratic party of Maryland and Representative Michael G. Oxley of the Republican party of