The Effects of the Sarbanes-Oxley (Research Paper Sample)

Article Review
The Effects of the Sarbanes-Oxley Act 2002 on Corporate Governance and Ethics
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The Effects of the Sarbanes-Oxley Act 2002 on Corporate Governance and Ethics
The Sarbanes-Oxley Act 2002
With intention to curb corporate scandals and to restore confidence in the corporate scene, Congress passed the Sarbanes-Oxley Act in July 2002 after a series of high profile corporate scandals at Global Crossing, Enron, Tyco, and WorldCom to mention just a few. This legislation was supposed to increase accountability and transparency in corporate governance, particularly through enhanced financial audit. However, over a decade since its enactment, opinion is still divided concerning its efficacy (Drawbaugh & Aubin, 2012). There have been many arguments for and against the stringent measures brought by this act, with some pundits arguing that it stifles corporate growth. This paper is a review of an article published in 2012, premised largely on the ethical issues, and the efficacy of the criminal penalties that the Act spawned.
Analysis: A Decade on, is Sarbanes-Oxley Working?
The article by Kevin Drawbaugh and Dena Aubin was published on July 30, 2012, a decade after the Sarbanes-Oxley was signed into law by President George Bush on July 30, 2002. The article begins with a reminder of the notable corporations that had imploded in the recent past such as Peregrine Financial and the Lehman Brothers with the intent to juxtapose these instances with the prime objective of the Act-to increase financial supervision of companies in order to predict their position within a foreseeable future.
The overall argument from the experts as expressed in this article is that for the most part, the Sarbanes-Oxley is working, having been able to enhance auditing and oversight to fend off book-cooking in the scale of Enron. There are some acknowledgments that the law has fallen short in some very significant way, though with experts arguing that going forward, the law may require amendments to settle some of these teething problems.
Let the Truth be Told: Ethical Innovations brought by the Act
That other states such as Canada, Germany, and Japan have enacted laws similar to the Sarbanes-Oxley Act, can be construed to mean that the law is a necessity in corporate governance. The principal legacy of this law according to Randy Eaddy, a partner at Kilpatrick Townsend & Stockton is that it has effected a cultural an attitudinal change in public companies which ideally makes it incumbent on the leading executives and directors to be more responsible when it comes to financial reporting (Maleske, 2012). The gains here basically mean that companies will not be able to hide their financial struggles in order to hoodwink the public that they are a going concern. Further, the rush by many companies to restate their past financial reports is in itself an attestation of the huge paradigm shift, ensuring that any public information about a company is credible and certified (Drawbaugh & Aubin, 2012).
Criminal Penalties: From Five Years to A Maximum of Twenty Years
By any measure, the Sarbanes-Oxley Act provides for very serious penalties for executives who wil...