Question

In your opinion, should the Sorbane-Oxley Act remain in force or should it be abolished? Explain your position.

The Sarbanes-Oxley Act (SOX) was signed into law on July 30, 2002 in response to corporate scandals such as WorldCom and Enron.

Now all companies are required to file periodic reports with the Securities and Exchange Commission (SEC) with new requirements for reporting of corporate obligations. Non-compliance to these regulatory requirements comes with significant penalties.

Debates have continued since 2007 over the perceived benefits and costs of SOX. Opponents of the bill have claimed that it has reduced America's international competitive edge against foreign financial service providers because it has introduced an overly complex regulatory environment into U.S.financial markets.

Proponents of the measure said that SOX has been a "godsend" for improving the confidence of fund managers and other investors with regard to the veracity of corporate financial statements.

SOX and ENRON article:

https://www.thebalancesmb.com/sarbanes-oxley-act-and-the-enron-scandal-393497

Answer 1

According to me Sarbanes-Oxley Act is good for both corporates and investors. It should not be abolishes.My reasoning is mentioned here. The Act requires companies to file periodic reports with SEC with new requirements for reporting of corporate obligations. Periodic filling of reports can help investors to follow the performance of the companies along with investors presentations and auditor reports on transparency and accontability. Although there are more compliances but at the same time it increases the faith of customers in Financial market which is of utmost importance. This is what SEC does in protecting the faith of the investors. In turbulent times traders or investors only trust those regulators which protect their faith. In turn it also helps companies bacause of availability of abudant capital at good interest rate range. Companies following the act will be treated better in the eyes of investors in compare to companies who hide information.