Effect of Matherial Weaknesses on Stock Exchange Market

11608 WordsMar 13, 201147 Pages
EFFECTS OF MATERIAL WEAKNESS ON STOCK EXCHANGE MARKET The impact of Sarbanes Oxley Act in companies’ share price Ronnie Damonte Month Year School of Business Administration TABLE OF CONTENTS: 1. INTRODUCTION 3 1.1 Background Information. 3 1.2 Objectives of the Research. 3 1.2 Research Questions. 4 1.3 Methods. 4 2. SARBANES OXLEY ACT 5 2.1 What is the “Sarbanes Oxley Act”? 5 2.2 SOX genesis. 5 2.2.1 Toward the SOX. 5 2.2.2 The development of SOX bill. 6 2.3 Structure and contents of Sarbanes Oxley Act. 8 2.3.1 - 100s Public Company Accounting Oversight Board. 8 2.3.2 - 200s Auditor Independence. 8 2.3.3 – 300s Behavior and Compensation of CEO, CFO and professional advisors. 9 2.3.4 – 400s Disclosure…show more content…
The introduction chapter of this paper presents next the research questions, the methods of the research and then an overview of Deloitte. The second chapter is concentrated on the Sarbanes-Oxley Act evolution, composition and theoretical framework. The third chapter presents the empirical research process and finally, the fourth chapter contains the results of the research and provides the analysis of the selected data. 1.2 Research Questions. The main research question of this bachelor 's thesis is: * How does a material weakness affect company share price? This main question is followed by two sub questions: * What are the differences between material weaknesses effects originating from companies having diverse sizes? * In which way the market reaction is influenced by the type of industry? 1.3 Methods. This is an inductive research where quantitative methods have been used. The quantitative analysis consists of stock price data acquired from the New York Stock Exchange and the results of audit regarding company 's internal control over financial reporting required by the Sarbanes Oxley Act. Statistical results of the data analysis have been received by using the Gauss curve, as preferred distribution function, and the

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