Corporate Governance - Cost Benefit Analysis of Sarbanes Oxley

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

As consultants for Ancher Public Trading (APT), Learning Team A would like to discuss the implications of the Sarbanes-Oxley (SOX) legislation. This memorandum provides a brief history of SOX¡¦s creation, explains the relationship amongst the FASB, SEC and PCAOB, describes the pros and cons of SOX, assesses the impacts of SOX, and lists ethical considerations of SOX.

Philip H. Siegel, Augusta State University, USA David P. Franz, San Francisco State University, USA John O’Shaughnessy, San Francisco State University, USA

In order to ensure effective regulation, the Sarbanes-Oxley legislation contains eleven sections that describe responsibilities of corporate boards (Engel, Hayes, & Wang, 2007). In case these responsibilities are not performed, criminal penalties are applied. The need for stricter financial governance laws created the global trend and such countries as Canada, Germany, France, Australia, Israel, Turkey and others also enacted the same type of regulations (Damianides, 2005). Today, the Sarbanes-Oxley legislation continues to play a fundamental role in the process of protecting the rights of investors and supporting a high level of investment attractiveness of the United States and companies that operate in the country. That is why this particular legislation can be considered as extremely benefiting for the national economy as well as investors.

of theses groups in the distribution of community services. Connors general closing molds that it

The Sarbanes-Oxley Act of 2002 – its official name being “Public Company Accounting Reform and Investor Protection Act of 2002” – is

I predict that the Sarbanes-Oxley Act will have a positive effect on corporate fraud by closing the loopholes that upper management has traditionally taken advantage of. Michael J. Gallagher, chairman of the Center for Audit Quality’s Professional Practice Executive Committee, believes that the Sarbanes-Oxley Act has been successful in reaching its objectives by reducing financial fraud (COHN, 2012). I happen to agree with how Mr. Gallagher feels about the effects of Sarbanes-Oxley Act to date. Nothing is going to eliminate the intentional fraud that is taking place on a daily basis. If a company is trying to hide something, they most definitely will find a way. Chief executive officers without a conscience will always make a bad name for hard working, honest companies that happen to be in big business. With the introduction of Sarbanes-Oxley Act and the guidelines that it sets forth, many companies are realizing that they have been making mistakes unwittingly. I believe that these companies are the biggest contributors to the

In the wake of the major financial scandals, that occurred in 2001 and 2002 the United States Congress passed the Sarbanes Oxley Act (SOX) of 2002. These financial scandals adversely affected the public’s trust in the stock market, therefore passing the SOX helped investors to regain trust in investing in the stock market. Prior to the SOX being passed “neither management or auditors of publicly traded companies were required to evaluate, audit, or publicly report on the effectiveness of internal controls over financial reporting” (Kinney & Shepardson,

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A recent study by Xue Wang (Emory University) tackles how SOX has affected the compensation and turnover rates of CFOs.   They play a critical role in developing firms’ financial reporting and making voluntary disclosure decisions.   Moreover, CFOs are ultimately responsible for the quality of internal control systems.   The study provides some important insights about the impact of SOX on the executive labor market.   It shows that requiring more disclosure of information about a firm’s internal controls provides some positive benefits with respect to corporate governance, in this case making it easier for boards to monitor the activities of CFOs.   In comparing and contrasting firms with strong internal controls received an increase in salary, bonus, and total compensation in the post-SOX time periods.   In contrast, CFOs of corporations reporting a problem with their internal controls incurred a significant reduction in their compensation packages.   With respect to CFO turnover, Wang did find that CFO turnover rates generally increased form the pre- to post-SOX period.

This paper provides an in-depth evaluation of Sarbanes-Oxley Act, which is said to be promoted to produce change in the corporate environment, in general, by stressing issues of public accountability and disclosure in the financial operations of business. It explains how this is an Act that represents the government's and the Security and Exchange Commission's concern in promoting ethical standards in terms of financial disclosure in the corporate environment.

South Africa has the most comprehensive corporate governance model which is a hybridization of the traditional Anglo-American and Continental European-Asian CG models. South Africa is also the most developed country in Africa nowadays. However, during 20th century, South Africa has faced war, crisis, and political issue. As a result, “by the late 1980s, many of South Africa’s corporations were bloated, unfocused and run by entrenched and complacent managers” (Corporate Governance in South Africa, Stephan Malherbe and Nick Segal, 2001). At that time, the economy of SA is dominated by small group of large enterprises and isolated from foreign trade by tariff, political shield and financial sanction. Why everything has been changed so far? How the model of SA imply to other developing economies?

Dissertation submitted in fulfillment of the requirements for the degree in master of business administration at

A DISSERTATION SUBMITTED TO THE DEPARTMENT OF BUSINESS STUDIES, CHRISTIAN SERVICE UNIVERSITY COLLEGE IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION.

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCES, UNIVERSITY OF ABUJA, ABUJA, NIGERIA