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Do you think the Sarbanes-Oxley Act will promote more ethical behavior from corporate officers and directors?

Do you think the Sarbanes-Oxley Act will promote more ethical behavior from corporate officers and directors?

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Expert Solution

Sarbanes - Oxley Act(SOX) has been introduced in 2002. This was introduced to improve financial disclosures from corporations, to help public from accounting errors and to prevent accounting fraud.It mainly aims at publicly held coporations,their financial reporting and internal financial controls.It examines ethical issues in corporate failures and promotes ethics in corporate governance.

SOX has been successful in strengthing two areas of investor protection which promotes ethical behaviour namely,

  1. Professionalism has been increased and engagement on the part of the corporate audit committes.
  2. The highest level management of corporations like CEO and CFO resposibilities towards financial disclosures and related controls have been increased and their accountability has also been increased.

Although there has been many reforms from SOX towards corporate officers and directors still it has to be improved in audit firm performance because auditors cannot be independent as they are paid by the companies for which they are auditing.

Simply saying, SOX promote more ethical behaviour from corporate officers and directors.

ekkarill92 answered 2 years ago
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