The Sarbanes-Oxley Act

The Sarbanes-Oxley is a U.S. federal law that has generated much controversy, and involved the response to the financial scandals of some large corporations such as Enron, Tyco International, WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate and covers and sets new performance standards for boards of directors and managers of companies and accounting mechanisms of all publicly traded companies in America. It also introduces criminal liability for the board of directors and a requirement by

Lehman Brothers adopted the utilitarian view of ethics, in which decisions were made based on outcomes and/or consequences. They concerned themselves with making enough profits to satisfy the greedy yearnings of the top few at the top hierarchy of management not minding if their activities were detrimental to the welfare of others. (ukessays.com) This was clearly seen in the mind-boggling case of Coleen Colombo.

Yes. Results of a recent study indicate that the executives of most major firms in the United States believe that firms do try to maintain high ethical standards in all of their business dealings. Furthermore, most executives believe that there is a positive correlation between ethics and long-run profitability. Conflicts often arise between profits and ethics. Companies must deal with these conflicts on a regular basis, and a failure to handle the situation properly can lead to huge product liability suits and even to bankruptcy. There is no room for unethical behavior in the business world.

While researching whether or not The Sarbanes–Oxley Act of 2002 (SOX) was the correct decision at the time, there was no lack of information to be found. There are thousands of conflicting articles on both sides of the isle. My thought is, although it has brought to light the need for a higher ethical standard within the accounting industry, to task the government the job of regulating morality simply does not work.

I don’t believe the lessons learned from the Sarbanes-Oaxley provisions are enough to return confidence to the American corporate system or its ability to operate in an ethical fashion because money makes people do unethical decisions. Our most recent recession in 2008 when WAMU failed other large corporations like the Lehman Brothers hiding over 50 billion in loans disguising them as sales and the Bernie Madoff scandal where the wall street investment firm tricked investors out of 64.8 billion through the largest Ponzi scheme ever. All these scandals happened in 2008 and many others. I believe it is possible to return confidence to the American corporate system through a incorporation of both. There will always be scandals like the ones mentioned

Without doubt, Sarbanes-Oxley Act and Corporate Sentencing Guidelines were well intended, however, even a decade later, there are still problems, and not much has changed. Ethics is one of the most important aspects that need to be present in the

Trinity Industries made a very commendable effort in accommodating with what has now become one of the most important aspect of any public company, the SOX compliance, and as this case study illustrates, a good example of managing such big changes that can affect companies in the unforeseen future. After many renown cases mentioned, like Enron and Adelphia Communication, it was imperative that the government would take a much required action to curtail any such accounting scandals from happening again. Hence, the Sarbanes-Oxley law was enforced, that is analyzed as the SOX compliance in the case study.

Hess, D. (2007). A business ethics perspective on Sarbanes-Oxley and the organizational sentencing guidelines. Michigan Law Review, 1051781.

Enron’s overall business practices are not ethical. One business practice of Enron that I think poses an ethical issue is their attitude towards its employees. They create a highly competitive and a result oriented business atmosphere. They used a system where they would rank employees every half a year and fire employees who ranked on the bottom 1/5 of the scores. This kind of attitude where only results matter and if you don’t produce anything good you will get fired will only hurt the company. This promotes unethical behavior and getting what needs to be done to get good results no matter what and if you do well you will receive big bonuses. This approach towards Enron’s employees did not have very good utilitarian reasoning. This

On the other hand, you could safely justify that companies, as a whole, are moving to become more ethical. Albeit probably not willingly, companies seem to be making this move as a result of the Sarbanes-Oxley Act of 2002. In Sarbanes-Oxley (SOX), there are certain provisions for companies regarding their Codes of Ethics. SOX states: “Section 406 requires public companies to disclose whether they have codes of ethics and also to disclose any waivers of those codes for certain members of senior management” (Navran and Pittman). Now the feet of upper management is being held a little closer to the fire, and without argument, doing business is a lot harder because of it when compared to doing business in the 40’s and

It seems like business morals and ethics are being whisked to the side in lieu of the ever growing demand of higher stock prices, rising budget goals and investor profits. Despite the increased regulation of corporations through legislation, such as, Sarbanes-Oxley, some corporations still find themselves struggling to maintain ethics and codes of conduct within the workplace. In reviewing the failings of the Enron Scandal, one can heed the mistakes that both individual and organization malaise, such as, conflicts of interest, lack of true transparency and the sever lack of moral courage from the government, executive board, senior management and others, contributed to the energy giant’s downfall.

Enron had numerous opportunities to address and eradicate their ethical conundrums. Both management and employees chose to avoid tackling their issues as demonstrated by a survey conducted in 2007 by the Ethics Resource Center which noted that nearly half of Enron employees witnessed questionable ethical behavior and chose not to let management know of their discovery (Ethics Resource Center, 2007).

Notwithstanding, most companies are run by ethical people. They may bend the rules, but few take the process to the extremes of Enron or WorldCom.

The discipline in terms of strategic management varies from country to country with very little established international governance to monitor business transactions. With the continued growth of global business, a universally established code of ethics is warranted. Outside of reprimand or being lauded for acting in a manner that’s socially acceptable, profit-seeking entities, especially multinational corporations, have found that their ethical behavior, either real or perceived, have financial consequences that impacts their growth and sustainability. Economist Milton Friedman contends, the market will reward or punish companies for unethical conduct without need for government regulation (Ferrell, Fraedrich & Ferrell, 2013, pg. 153). Over the past two decades heavy fines have been levied on a multiple corporations because of unethical business practices on the global stage. Most claimed they were not aware of moral standards or other wrongdoing and immediately tasked company strategists to develop and implement corrective action. Robertson and Crittenden stated, by understanding variables and dominant moral philosophies, policymakers and strategists charged with establishing organizational codes of ethics, will develop corporate training programs, and implement local decisions to be better prepared for implications of their decisions and actions

More and more companies recognize the link between business ethics and financial performance. Companies displaying a clear commitment to ethical conduct consistently outperform companies that do not display ethical