The U.S. Sarbanes Oxley Act 2002. "Big Brother is watching you" or adequate measures of Corporate Governance regulation?

Studienarbeit , 2005 , 21 Seiten , Note: 1.1

BWL - Unternehmensführung, Management, Organisation

Corporate Governance has become one of the hottest fields of international company law and economics. Whereas many European countries have chosen self regulatory market based approaches or favour comply or explain provisions, the U.S. government decided to take mandatory legislative actions in the aftermath of various accounting and corporate governance scandals, headed up by Enron and WorldCom. This article explains why most, if not all of the relevant provisions regarding corporate governance, are ill conceived and thus should be withdrawn the sooner the better to prevent future economic harm. The author concludes with an evaluation and an outlook for alternatives.
Abschlussarbeit im Kurs Corporate Governance im Rahmen des LL.M. Studienganges Internationales Wirtschaftsrecht an der Universität Aberdeen, Schottland

Inhaltsverzeichnis (Table of Contents)

• A. Introduction
• B. Incidents which lead to the enactment of SOX
• C. SOX Corporate Governance Provisions
  • I. "Inside" disclosure and monitoring provisions
    • a. Sec. 301 SOX - Public Company Audit Committees
    • b. Sec. 302 and 906 (a) SOX - Corporate Responsibility for Financial Reports
    • c. Sec. 404 SOX - Management Assessment of Internal Controls
    • d. Sec. 906 (a) SOX - Criminal Liability for CEOs and CFOs
  • II. "Outside" disclosure provisions
    • a. Sec. 401 SOX - Disclosure of Off Balance Sheet Transactions
    • b. Sec. 402 SOX - Disclosure of Prohibited Corporate Loans
    • c. Sec. 403 SOX - Disclosure of Transactions involving Management and Principal Stockholders
    • d. Sec. 406 SOX - Disclosure of Corporate Governance Practices
  • III. Other SOX provisions
    • a. Sec. 303 SOX - Improper Influence on Conduct of Audits
    • b. Sec. 304 SOX - Forfeiture of Bonuses and Profits
    • c. Sec. 305 SOX - Real Time Disclosure
    • d. Sec. 306 SOX - Corporate Responsibility for Financial Reports
    • e. Sec. 405 SOX - Disclosure of Changes in Internal Controls
    • f. Sec. 407 SOX - Disclosure of Financial Expert
    • g. Sec. 408 SOX - Service Provider Conflicts
    • h. Sec. 409 SOX - Real Time Disclosure of Material Changes
    • i. Sec. 906 (b) SOX - Criminal Liability for Accountants
• D. Evaluation and Outlook
• E. Conclusion
• Literaturverzeichnis (Bibliography)

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This article aims to critically analyze the Sarbanes-Oxley Act of 2002 (SOX) and its impact on corporate governance in the United States. It examines the rationale behind the Act's enactment, focusing on the accounting scandals that preceded it, and delves into the specific provisions of SOX, particularly those related to disclosure and monitoring. The article argues that many of these provisions are ill-conceived and may have unintended negative consequences for corporate governance.

• The evolution of corporate governance in the United States, with a focus on the shift from market-based regulation to government-mandated rules.
• The role of accounting scandals, such as Enron and WorldCom, in prompting the enactment of SOX.
• The specific provisions of SOX, including those related to audit committees, corporate responsibility for financial reports, and disclosure requirements.
• The potential benefits and drawbacks of SOX's approach to corporate governance, including its impact on investor protection, corporate efficiency, and the role of the market.
• Alternative approaches to corporate governance and the future of SOX.

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction provides context for the Sarbanes-Oxley Act of 2002 (SOX) by highlighting the shift in U.S. corporate governance from market-based regulation to government-mandated rules. It emphasizes the significance of SOX as a response to a series of accounting scandals, particularly those involving Enron and WorldCom. The introduction also discusses the rationale behind SOX, which prioritizes investor protection and government oversight.

Chapter B delves into the specific events that led to the enactment of SOX. It examines the accounting and bankruptcy scandals that began with Enron and continued with WorldCom, Adelphia Communications, Tyco, and others. The chapter explores the factors that contributed to these scandals, including the growth of the stock market bubble, the pressure on companies to meet analysts' expectations, and the lack of effective oversight by the Securities and Exchange Commission (SEC).

Chapter C provides a detailed analysis of the corporate governance provisions introduced by SOX. It examines the "inside" disclosure and monitoring provisions, including the requirements for independent audit committees, corporate responsibility for financial reports, and the criminal liability of CEOs and CFOs. The chapter also discusses the "outside" disclosure provisions, such as the disclosure of off-balance sheet transactions, prohibited corporate loans, and corporate governance practices. Finally, it explores other SOX provisions, including those related to improper influence on audits, forfeiture of bonuses, and real-time disclosure.

Chapter D evaluates the effectiveness of SOX's approach to corporate governance, considering both its potential benefits and drawbacks. It examines the impact of SOX on investor protection, corporate efficiency, and the role of the market. The chapter also discusses alternative approaches to corporate governance and the future of SOX.

Schlüsselwörter (Keywords)

The keywords and focus themes of the text include corporate governance, Sarbanes-Oxley Act 2002, accounting scandals, investor protection, audit committees, disclosure requirements, corporate responsibility, and the role of the market. The article explores the impact of SOX on corporate governance in the United States, examining its effectiveness in preventing future scandals and its implications for corporate efficiency and investor confidence.

• Hochschule: University of Aberdeen
• Note: 1.1
• Autor: Bernhard Kuschnik (Autor:in)
• Erscheinungsjahr: 2005
• Seiten: 21
• Katalognummer: V186138
• ISBN (eBook): 9783656999324
• ISBN (Buch): 9783656999928
• Sprache: Englisch
• Schlagworte: Corporate Governance