Essay: Consequences of Sarbanes-Oxley Act

Sample Essay

As a result, the smaller companies have started to delist themselves from the New York and American based Stock exchanges and instead have started to enlist on the LSE and the HKSE. In addition to this, the trends have depicted that the majority of the initial public offerings that are being made are in the European stock exchanges instead of those in America. “One unintended effect of the law has been a steady move by smaller capital companies to go off Wall Street and into more hospitable regions like private equity buyouts, listings on more regulation friendly international exchanges or even de-listing from the U.S. exchanges. Sarbanes-Oxley has had a negative impact on American competitiveness. Accountancy in the U.S. is so highly influenced by financial reporting requirements that it has distracted American business from doing business.” (O’Connor, 2005)

In order to prevent fraud, the whistleblowers are supported by the Sarbanes-Oxley Act to monitor their firm’s business activities and report to the authorities in suspicion of fraud. “The law required public companies to create “anonymous reporting mechanisms” such as fraud hotlines so that employees could report suspicions of fraud without fear of reprisal.

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