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The Sarbanes-Oxley Act (2002)

            The Sarbanes-Oxley Act was named after senator Paul Sarbanes from Maryland and senator Michael Oxley from Ohio who were the co-sponsors of the act. This act, also known as the "Public Company Accounting Reform and Investor Protection Act," was enacted because of some of the major corporate and accounting scandals. The government wanted to find a way to reduce these types of scandals from happening because it cost the investors billions of dollars. Through enacting this law the government is hoping that less scandals will appear because of the tight guidelines and strict punishment, which is presented in the Sarbanes-Oxley Act. .
             The Act was widely accepted by congress and passed Senate with a 99 to 1 vote and House of Representatives with 423 in favor. Something had to be done because to many people were losing money and companies were producing fraudulent numbers, which were misleading. The Sarbanes-Oxley Act has eleven sections which state different rules, regulations, and punishments. This act however has faced mixed feelings because on the one hand it helped restore public confidence in big publically traded company however it has also made the price of doing business very high and too high for many companies. .
             Since the creation and adoption of the Sarbanes-Oxley Act many business have changed the way they operate internally and externally because of they must make sure they comply with this act. A study in 2007 showed that the cost of compliance with the SOX Act for large companies that make around 5 billion can be up to 3 million. (Fei.mediaroom.com.) Due to the demands of the SOX Act companies have to reach out externally and even sometimes move their company overseas. After the act was passed the number of American companies deregistering for public stock exchange almost tripled from pervious years. This act was so expensive because companies are forced to get more eyes on their financial statements by paying additional accounting firms to look over company's statements.

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