Question

Has Sarbanes Oxley been an effective piece of legislation? (200 words)

Answer 1

Yes, even if the results aren’t staggering and as relevant as the act hoped for, the act has been able to bring social and ethical changes to the way that companies operate to a large extent. We can say that the shareholders now ask the companies to behave ethically, be transparent, and show their books to them in order for them to continue their support and invest further. This has made auditing a better part of the company’s processes and has been able to keep the upper management in check, especially where cases of fraud which could have easily slipped past were either discovered or, even if the opportunity was presented, the individuals did not think to act upon it. It, therefore, holds the industry to a higher standard of financial functioning and allows the companies in the market to become stewards of these ethical and financial standards which is what the act had hoped to achieve, only at a larger scale. The act has also increased the criminal penalties for these misconducts and offenses, creating a suitable environment for standards to propper, even though we still find these misconducts here and there, the severity and the scale of these misconducts have drastically increased. We can say that with this act in effect, we are more likely never to see another company at the scale that Enron’s books were cooked.

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