the Sorbanes Oxley Act

Running head : THE SARBANES OXLEY ACT

Introduction

The introduction of Sarbanes Oxley has restored public confidence in the accounts of publicly quoted companies . Other market players have relied on such reports to base their investment decisions . Private companies keen on improving their accounting procedures and internal controls have adopted a number of accounting standards set out in the act . However there have been some negative aspects associated with the Act . A large number of foreign investors postponed their investment decisions raising concerns about the high costs of complying with the act

p Several public companies reverted to private status and delisted from the stock exchange (Jahmani Dowling , 2008 . Market analysts and SEC officials suggest that most of the firms that delisted did so because they had serious accounting issues and not because of cost implications associated with restructuring their accounting systems . On the whole the act has brought financial discipline into the markets although oversight lapses by concerned bodies contributed to the collapse of Lehman Brothers and the perpetration of Bernard Madoff 's Ponzi scheme

A study undertaken by Governance Metrics International revealed that the act had improved corporate governance across the nation by 10 (Jahmani Dowling , 2008 . This was attributed to provisions delinking the board of directors from running the affairs of the company and the separation of the CEO and Presidents positions . Independent CEO 's were under less pressure to board members especially when some of the boards demands clashed with stakeholders interests

Strict rules governing the operations...