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Sarbanes-Oxley Act Of 2002 Analysis

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John Maynard Keynes John Maynard Keyes is a British economist that is known for his views and thoughts on macroeconomics. Keynesian economics govern his ideas, which indicates that economic output in the short run are heavily influenced by aggregate demand. Keynesian economics finds aggregate demand to be influenced by many factors, which may act in an unstable way. This view of economics was first introduced during The Great Depression with Keyes’ book The General Theory of Employment, Interest and Money. Keyes believed that, during The Great Depression, aggregate demand would be the determinant of economic activity and that inadequate demands of this nature could continue the issues of unemployment. In response to these thoughts and historical …show more content…
This act is called the Sarbanes-Oxley Act of 2002, or SOX. There are two key components of the Sarbanes-Oxley Act that provides support to the existing legislation regarding dealings with securities. The first key component is Section 302, which is a provision set to require management to certify the accuracy of all publicly reported financial statements. This was set in place to give investors peace of mind about investing into a company based off of financial reports. In the event of fraud or misrepresentations, the investors had SOX to rely on to pursue any losses incurred based off of misleading financials The second key component is Section 404, which deals with the internal controls of a corporation. To give investors even more security, internal controls were set into place to ensure that the controls of the company were being managed and executed properly. From that, auditors are now required to audit the internal controls of each company and make notes of any deficiencies that …show more content…
This act is considered to be a massive piece of work designed to reform areas of financial risk and oversee the banking system. Through this act, the Financial Stability Oversight Council and Consumer Financial Protection Bureau (CFPB) were created for the purposes of monitoring and preventing certain activity in the financial markets. The Financial Stability Oversight Council refers to the “too big to fail” concept. For companies that are too big to safely operate without possibly affecting the economy, this council monitors the activities of these companies to ensure the safety of the economy. In certain events, the council can restructure or break up entities that are too large or a liability to overall health of the market. In some cases, bailouts for these companies are provided, if necessary, to prevent the company from failing and causing a major shift in the

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