Sarbanes Oxley Act

537 Words3 Pages
Praises and Criticisms Whenever a new bill of legislation is signed into law, there will always be criticisms and praises of the legislation. Some will argue the new legislation is doing an effective job and fulfilling its intended purposes. On the other hand, some will argue the new legislation creates new costs to society, both financially and socially. In the case dealing with the Sarbanes-Oxley Act of 2002, the new legislation received scrutiny from many, while others felt the Sarbanes-Oxley Act successfully complete its intended goals. As noted earlier, the main purposes of the Sarbanes-Oxley Act was to restore investor confidence in publically traded companies in addition to preventing any large future fraud scandals from occurring as they had prior to the enactment of the Sarbanes-Oxley Act. Amongst the sources who praised the Sarbanes-Oxley was The Financial Executives International. In 2007, the Financial Executives International conducted a survey of 185 to research the effects of the enactment of the Sarbanes-Oxley Act. These studies concluded that 50.3% of the companies believed the accuracy of their financial reports has increased while 56% believed that these reports are more reliable. Amongst the 185 companies, 43.6% of them stated that they felt the Sarbanes-Oxley provisions helped reduce fraud and 69.1% of the companies stated that investor confidence has increased in their financial reports (financialexecutives.org). For example, the new provisions of the Sarbanes-Oxley led to the discovery of the fraudulent scandal involving Value Line. When a manager was required to sign the company’s Business Code of Ethics, he realized fraudulent activity and reported it. Without the Sarbanes-Oxley Act, this act o... ... middle of paper ... ...d by the Sarbanes-Oxley Act. These provisions also pushed domestic public companies and other foreign companies to enter foreign stock exchanges, such as the London Stock Exchange (Luez, 147). Some sources argue the financial crisis of 2007 could be linked to the Sarbanes-Oxley Act. In result of strict regulations of the Sarbanes-Oxley Act, there was a lack of Initial Public Offerings (IPOs). The New York Stock Exchange began to weaken, causing an economic downturn (business.laws.com). From these criticisms, it is hard to tell whether or not the positive effects and praises of the Sarbanes-Oxley Act outweigh the harsh criticisms and negative effects. Section 302 The third title out of eleven of the Sarbanes-Oxley Act is entitle Corporate Responsibility. This title increases the responsibility of Senior Executive to ensure the corporate financial records are
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