Question

With the past events at Enron, WorldCom, and other scandals, ethics has become a major issue in today’s world. Not only has the ethical issues with these companies effected the workers and people within, but it has had a major effect on the stakeholders, government and the economy. The SOX act has been created because of the various scandals that rocked our country. Tell me why SOX has changed business for the better?

Also tell me if there is more unethical behavior today, have standards changed, or is it simply that today’s media and communications shed more light on the problems? Remember that we are all connected with instant information and that was something that did not exist years ago.

Answer 1

SOX act or Sarbanes Oxley Act has changed businesses for the better, because it makes businesses to make more corporate disclosures, makes firms implement policies that prevent accounting fraud and other fraudulent activities in the firm. As a result, investors and other stakeholders' best interests are protected. It means that SOX act is changing businesses for the better and they are more safe for the investments.

These days, standards have become more stringent, more regulatory disclosures are required and more transparency is demanded. Hence, it has reduced the scope of fraud. Though, firms can get involved in window dressing that is also considered unethical in nature. In the past, there were lack of scrutiny and lesser stringent regulations, so they could not get caught. But, these days, it is very difficult for the businesses to do the same as that was being done 15 years back.