What Are The Pros And Cons Of The Sarbanes-Oxley Act

The Sarbanes-Oxley Act (SOX) was put into place in 2002 by Congress after being developed by Senator Paul Sarbanes and Representative Michael Oxley. The purpose of SOX is to “protect shareholders and other stakeholders of publicly traded companies” (Vanderbeck, 2013, p. 11). SOX became about because although The United States already had the Securities Act of 1933 it only held the corporations responsible, therefore, the CEO’s did not have to legally tell the truth making it hard hold them responsible for their actions. There are many important parts to the act. In this paper, I will discuss some of the importances of the act, the impact it has had on The United States, and the pros and cons.
What are some of the importance’s of the Sarbanes-Oxley …show more content…
Some of the pros are: companies and individuals are being help responsible for accounting practices more than before, and before the act companies would trick investors which lead to the companies losing the trust of those investors. The cons have not been mentioned very much at all, but while there are many clear advantages to this the disadvantages are not very clear. One of the most important disadvantages is that the process of following all of the guidelines can be costly. But, this brings us to our next disadvantage, while there are all sorts of guidelines to follow there is no plan on how to put these guidelines into place. A third disadvantage is that they have to rely on investors whenever they have sudden, large expenses that they cannot manage by …show more content…
What I have been able to learn has been very valuable. While I could list many things that I have learned, the one thing that will stick with me is how important it is to have this law to keep the corporations and the CEOs of those businesses in check. I never imagined that there was that much fraud with our accounting systems. Also, while exploring all of the pros and cons of this act, in my opinion, the pros far outweigh the cons. One of my main reasons is that investors are exactly what their name is for a reason, now don’t get me wrong, they do not want to be used and that is one of the reasons for the new law but, they invest money into that company to help keep that company going. With very few changes made to the legislation I think we can agree that this was very good law put into place. Everyone need to be held accountable for the business that they practice, but that does not stop at the