Question

Do you think that the ethical guidelines and constraints imposed under Sarbanes-Oxley have sufficiently restored public confidence? Why or why not? Are there any current events that might apply to this question?

Answer 1

The Sarbanes Oxley Act 2002 was enacted to restore investors' confidence in financial markets by improving corporate governance in Companies. The Act emphasizes on improving audit committees, perform internal control tests, make directors and other executives significantly liable for ensuring ethical implementation of policies at the Organization level so as to maximize shareholders' wealth. The Sarbanes-Oxley Act also establishes stricter criminal penalties for securities fraud and changes how public accounting firms operate. Thus, if this act is adhered to with utmost good faith by Companies, then public confidence in financial markets shall be restored to a great extent.

In March 2019, Google was accused that its founder Larry Page had personally approved a $150 million stock option package for Rubin, who was being investigated following sexual-misconduct complaints. The accusation was that Page had bypassed the Board of Directors to approve the loan. This is a classic example of corporate governance failure and non adherence of the SOX Act 2002.

Note: If the answer is helpful in any way, please upvote :)