Question

Sarbanes-Oxley (SOX) Respond to and justify your position on 1 of the following statements: 1) SOX...

Sarbanes-Oxley (SOX)

Respond to and justify your position on 1 of the following statements:

1) SOX has been effective in increasing shareholder value OR

2) SOX has not been effective in increasing shareholder value

Think of ‘shareholder value’ in a broader sense that just pure financial results, ex: risks, uncertainty.

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Answer #1

Sarbanes-Oxley act of 2002 states that it is the responsibility of the management of the company to ensure that the company reports all the financial transactions that are occurring in the company. The aim was to ensure that companies do not carry out any fraud. This includes the fabrication of data and financial information in the balance sheet of the company. The Act ensures the presence of corporate governance in the organization. The shareholder's value is increased due to SOX. This is because the Act ensures that the company shows its financial data in a transparent manner. The shareholders can therefore take an informed decision. The value of the shareholder increases in this manner.

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