f the federal law in achieving its objectives and aims 4) inspecting the implementation of the law’s tenets in the scenario 5) conducting an evaluation of the federal law and 6) providing recommendations for improving the scope of the federal law and enhancing its effectiveness.
The Sarbanes-Oxley Act of 2002 or SOX, which is also termed as the ‘Public Company Accounting Reform and Investor Protection Act’ as per the Senate and known as the ‘Corporate and Auditing and Accountability and Responsibility Act’ as per the House is a federal law which was sponsored by United States Senator Paul Sarbanes (D-MD) and United States Representative Michael G. Oxley (R-OH) (Zelizer, 2002). The historical context of the Act is associated with an increase in the incidence of high-profile accounting scandals that marred several corporations across the United States namely Enron, WorldCom and Tyco International amongst several others in the period preceding the inception of the federal law and its tenets (Act, S.O, 2002).
The consequences which followed the scandals that targeted key organizations across the nation greatly affected investor’s confidence in securities markets of the country and led to the incurrence of significant loss on the investor’s part which amounted to billions of dollars (Act, S.O, 2002). According to Miller and Bredeson (2009), individuals’ financial trends are characterized by their monthly income and since most individuals within the United States are unable to save on an extensive scale because of minimal salaries or working on legal minimum wage, those who are still able to retain a certain percentage of their income on a monthly basis seek to secure their savings in a reliable source. In the given situation, investing in corporate stocks to benefit from high returns appears to be a viable option that is also secure in comparison with other alternatives (Miller and Bredeson, 2009). The attractiveness of investing in corporate stocks is