The Sarbanes-Oxley Statute - Case Study Example

In 2002, the Sarbanes-Oxley statute was enacted by the United States in an atmosphere of strange anxiety, Further, the Sarbanes-Oxley is among the most controversial and influential parts of co-operating law ever witnessed. Thus, its main aim was to observe the financial and accounting standards in government-owned companies, through this the liability of manager to subordinates will be increased. Therefore, the rampant crisis of trust in American capitalism that was aroused from scandals in WorldCom, Enron, and other companies will calm down (SOX, 2002).

However, Sarbanes-Oxley (SOX) has also created major negative effects in the United States corporate. First of all, the majority of companies have decided to stay held privately since being public makes them accountable to the SOX act. Additionally, other public companies that had their names in the stock list have removed themselves. Therefore economists say that this is a big concern since it could lower the economist’s entrepreneur spirit (Zhang, 2007). Secondly, senior managers nowadays instead of putting more attention on strategizing the growth of their firms, they have been seen to be more concerned about the ethical statuses of their organizations.

Furthermore, they are hesitative to make brave business decisions and have become hesitant in their plans to expand. Thus, SOX has become somehow too much regulation for corporate America (Rao, 2011). References Rao, P. (2011). Taking sides. New York: McGraw-Hill. SOX. Sarbanes-Oxley Act of 2002, H.R. 3763 Exchange Organizational Behavior Teaching Journal 66 (2002). Retrieved from news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf Zhang, I. X. (2007). Economic consequences of the Sarbanes-Oxley Act of 2002.

Journal of Accounting and Economics, 44, 74–115.