Since the enactment of the Sarbanes Oxley(SOX) Act signed by President Bush in the US in 2002, which aims to prevent attention grabbing corporate fraud, improve internal control in listed companies and restore confidence amid investors, in the wake of spectacular collapse of heavy weight ‘corporate America’ of Enron, WorldCom. However, the burdensome SOX is estimated to cost companies as much as $4m a year to implement, it seems to be too costly to businesses and require too much unnecessary red-tape that companies do not appreciate. In addition, section 404 of the Act requires financial directors and chief executives to take full legal responsibility for their accounts, with possible jail time if they found to be guilty; this can be an unattractive for foreign companies with little business operation in theUS.
If the current trend continues,New Yorkwill soon lose its leading position as the world’s financial center. While the general consensus is that Sarbanes Oxley is causing the fall ofNew York, this dissertation aims to understand the pros and cons of Sarbanes Oxley, and in particular, try to study the effect of Sarbanes Oxley onLondon’s capital markets.
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