History Of The Sarbanes-Oxley Act

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Corporate America with Sarbanes-Oxley Act
Many benefits came out of the creation of Sarbanes-Oxley in 2002, one being less fraud occurring within companies. Companies like Enron were a main reason for the creation of the Act. Enron was reporting huge numbers in profits, but on the flip side the company was going further and further into debt. “Between 1996 and 2000, Enron reported an increase in sales from $13.3 billion to $100.8 billion.”(Ackman, D. (2002, January 15) .What Enron did was covering up the losses they had with putting them up profits. This caused major fraud to be committed within the company. To report a large sum in profits should be cause for some questions to be asked. But before Sarbanes-Oxley Act was put into place, so
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Not only was Enron a huge scandal at the time but also now WorldCom was coming into the picture, with this the public questioned as to how corporations were being governed (Welch. M. (2006)). In the wake of these scandals something major needed to happen to prevent any more corruption to occur. Both the Senate and the House in the summer of 2002 passed Sarbanes-Oxley Act with popular vote (Bumgardner.L. (2003)). After the Act was passed it called for changes in how companies run. Companies really had to look at how the roles of the companies’ top associates were going to change. Now when a company sends out financial statements, the managers of the company have to take ownership that the information being presented to the public and shareholders is correct. This can put an enormous amount of pressure on the company to report accurate numbers as to how the company is preforming, without Sarbanes-Oxley this would of never happened. Companies would not have to take ownership of what is being shared with the public and shareholder. Also now a clear picture is show as to how a company is truly preforming. It can be said that this is a…show more content…
“…the law has reshaped attitudes toward corporate governance (Peregrine.M. 2012, July 25). This was said ten years after Sarbanes-Oxley was first enforced into Corporate America. The Act changed everything we know to this day about the regulations within Corporate America. Some still try and say that the Act has done nothing and other differ and say it was a success and still is. Shareholders now have more trust within companies and the ethical behavior a company shows (Peregrine.M. 2012, July 25). Without the creation of Sarbanes-Oxley can it be said that shareholders with the company would still feel the same? “Sarbanes-Oxley seized the center of corporate direction from the corner office and returned it to the boardroom, where it belonged. Moreover, the law encouraged the identification of “best practices” to guide boardroom conduct. It has helped to shape the focus of state courts and regulators on the proper application of other fiduciary duty laws. It has raised the public consciousness of corporate governance” (Peregrine.M. 2012, July 25). All this is saying is that companies are improving operations as to how decisions are being made. This is for the better because it calls for some sort of accountably for major decisions. Also shareholders can feel a since of trust within the

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