Question

1. From your understanding of the Sarbanes–Oxley Act, explain how you feel

it may negatively affect America’s stock exchanges.

2. What advantages would China offer foreign companies to list on its

exchanges? Are these advantages greater than the disadvantages? Explain.

3. Do you feel that China will eventually control the world’s financial industry?

Explain your answer

Answer 1

From your understanding of the sarbanes-oxley act, explain how you feel it may negatively affect the America’s stock exchanges

Answer:- The Sarbanes Oxley act is a legislation that followed the market failure that influenced public business through transformation of the financial system. The Sarbanes-Oxley compliance act had high costs that made the companies to shy away from going public, negatively impacted the investors and economic growth. These cost includes; increased expenses for annual audits, purchase an internal control software an internal control plan and track internal performance.

Smaller companies too faced high maintenance costs for them to remain public while others decided to look for capital in other ways.

The American stock exchange will greatly decline because not only small companies will shy from going public, but also big companies that will fail to meet these requirements will not be allowed to participate in business and trade their stock or raise capital through issue of shares.

Do you feel china will eventually control the world’s financial industry? Explain your answer.

Answer:- China will not be able to control the world financial industry. Despite china being a developed and industrialized country, there are challenges that make doing business an uphill tasks. Some of the challenges are:

Bureaucracy-there are strict laws that make investors coming into china think twice about their decision because of the laborious process of obtaining licenses. However in the USA there is less laborious process of obtaining licenses to start business.

Consumer preference- there is a diverse of preference among people in china and many foreign and local firms have failed because of not talking consumer preference into account.

Market access- some of the factors that have made china market difficult to access is poor local distribution networks, buying habits of local consumers and regulatory requirements. This has caused the Chinese market to be detached from the other economies and statistics has it that 37% of the products that pass for the US market fail in the Chinese market.