The Sarbanes-Oxley Effect Assignment Example | Topics and Well Written Essays - 1000 words

The Sarbanes-Oxley Effect - Assignment ExampleMajor monetary scandals which involved big companies such as Enron and Worldcom gave a strong impetus towards bringing in SOX personation. some of these scandals took place in companies which aggressively pursued all the common principles of accounting, hence scandals in such places were in like manner a big set back for the market investors. Therefore a strong need was mat to bring in a stringent law that would not only keep a handicap on monetary reporting but also help in rebuilding investors confidence. The main inclination of SOX is to improve the accuracy and reliability of financial disclosures by corporates and to ensure integrity in their financial reporting. The act also imposes severe penalties and punishments for the CEOs and CFOs of the firms which fail to adhere to its requirements.There have been numerous studies and researches on this subject. Keeping in lieu with SOX intention of increasing financial accuracy, Coh en report of 2005 suggests a steady increase in financial accruals before SOX and a reversal in this trend dribble-SOX. Heflin and Hsu paper (2004) indicates a significant decline in the use of non-GAAP earning measures and a probability that disclosed earnings either exceed or meet expectations post SOX.