The Unintended Consequences of Sarbanes Oxley Act

Abstract

The Unintended Consequences of Sarbanes Oxley Act Dr. Kingsley Wokukwu Abstract This paper argues that Sarbanes Oxley Act has given investors a fresh breath of life with a renewed sense of confidence in the US financial market. Sarbanes Oxley Act tend to minimize corporate collapses, audit failures and litany of financial restatements that permeated the corporatearena, the financial market several years and bred deep cynicism and public anger. Sarbanes Oxley Act is signed into the law to restore confidence in investing public and financial markets through a combination of rules and oversight that address conflict of interest on investor side and the lack of accountability on the corporate side to improve corporate governance. It aimed at to compensate for the failure of governances that culminated in Enron, WorldCom and Tyco financial scandals. Corporate managers are being held accountable for corporate governance and Sarbanes Oxley Act also detects what firms can and cannot do. All corporate senior officers and participants in the preparations of published financial reports have increased responsibilities and consequences for failing to leave up to the standard and responsibilities. Due to SOX, the top corporate officers such as the CEO and CFO are required to take personal responsibility by certifying both quarterly and annual financial statements and disclosure. Firms have better internal control environment as a result of Sarbanes Oxley Act. This translates to a more accurate and reliable information conveyed to investors who would rely on published financial statements to make informed investments decisions. Full Text: PDF DOI: 10.15640/ijat.v3n2a1