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Sarbanes Oxley Act Essay

1193 words - 5 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 ...view middle of the document...

When asked about the legislation implementation, Thomas comments, "[it is] absolutely needed and well intentioned” but that “the implementation has been a disaster." (Newman, 1). The disasters Thomas is talking about are the increase of compliance costs for public companies and the negative effects on the stock exchange. With the new provisions of Section 404 of the Sarbanes-Oxley Act, it is required for public companies to hire external auditors, increase insurance, increase compensation for board members and incur various legal costs. The stricter provisions of the Sarbanes-Oxley Act also had a negative impact on the New York Stock Exchange. These stricter provisions discouraged private companies from going public due to the overbearing restrictions. These companies did not want to have to worry about complying with the intricate provisions set forward 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

Works Cited

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...

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