Sarbanes-Oxley requires companies to implement robust, extensive anti-fraud programs and internal controls from the top to bottom. The aim is to keep fraud from taking root and to prevent serious crimes from surfacing. It was strongly argued for the case of Sarbanes-Oxley, the internal control which comply with the Act will allow companies to operate more effectively, managers can run the companies more efficiently due to improved corporate governing. Investors are protected because listed companies all need to have their internal control system and financial statements to undergo greater scrutiny. The Act was also certainly intended to restore investor confidence in the interest of the capital markets and the economy. (Maria and Crystal, 2007)
There may be potential benefit of an increase in share price resulting from enhanced investor confidence; and a reduction in costs associate with enforcement actions and lawsuits. In a research on the correlation between the stock price returns of 605 cross-listed firms and the announcement of the Sarbanes-Oxley Act, the researcher found that companies based in countries with mid-level accounting standards and shareholder legal protections experienced a rise in their share prices on their listed US exchange concurrent with the Act’s public announcement (Smith 2005).
These are excerpts of essays please place order for custom essay paper, term papers, research papers, thesis, dissertation, book reports and case studies.