Tag Archives: Enron

Do the Benefits of The Sarbanes-Oxley Act of 2002 Outweigh its Many Costs?


There is a general pattern seen in the world of finance: giant corporate fraud or scandal, resulting government investigation that inevitably is unable to prosecute those responsible, followed by lengthy governmental legislation attempting to prevent the fraud/scandal from ever happening again. In the early 2000’s this pattern played out in the form of multiple scandals such as Enron and WorldCom with resulting legislation in the form of the Sarbanes-Oxley Act of 2002.
SOX is said to be the most sweeping piece of legislature regarding financial reform since FDR’s Securities Act of 1933 and Securities Exchange Act of 1934. It attempted to restore confidence and transparency to companies’ financial statements and therefor the market as a whole. SOX was for the most part able to accomplish this goal, but not without substantial costs to public companies and the market. Compliance costs were grossly underestimated by Congress and the regulatory agencies leaving public companies with no choice but to take the hit. Additionally, there have been substantial declines in the United States’ competitive edge in the global capital markets.
This report is concluded with three suggestions to help accomplish several goals of SOX that have not yet been achieved as well as an overall answer to the question of whether or not the costs of SOX outweigh its benefits.

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How much would you risk to have it all?


rules

A common trait of those who rise to the top in any craft or profession is a ruthless competitiveness, a desire to win, a desire to be the best. These men and women’s unbelievable competitive drive, be it from hatred of losing, love of winning, fear of failure, or another motive, is the trait that brings them to such great heights and also often causes them to fall as spectacularly as they rose. I was surprised to see only one other post about House of Cards, whose 3rd season was released on Netflex this week.

*There will be no spoiler alerts in this post*

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