S congressman Paul Sarbanes and Representative Michael Oxley are the architects of The Sarbanes-Oxley Act (SOX). Introduced in July 2002, caused a major change in corporate governance and in the financial areas of business in U.S exchange. Previous to this act, many businesses were involved or associated with extortion, leading to the act that will attempt to re-gaining the confidence of investors .
The Sarbanes-Oxley Act.
"Public Company Accounting Reform and Investor Protection Act of 2002" (in the Senate) and also called "Corporate and Auditing Accountability and Responsibility Act" (in the House), the Sarbanes-Oxley Act was approved by the House by a vote of 334 to 90 and also approved by the Senate 99-0, signed in July 30th 2002 by President George W. Bush. Architects congressman Paul Sarbanes and Representative Michael Oxley, with intentions of saving corporate America, might of did some good and some bad. This act was a response to a considerable amount of scams performed by some major and prominent companies in the United States in the 2000's. The main purpose of the act is to protect shareholders from deceitful financial statements put out by companies and to reconstruct the faith of investors. If for any reason shareholders decide the financial declarations business put out, the value of the U.S stock exchange will and has gone down. According to the book, The Sarbanes-Oxley Act: Implementation, Significance, and Impact (by Wilma H Fletcher, Theodore Plette, Preface, para. 3) state, "Since the market's peak in early 2000, U.S stocks have lost about $7 trillion in value". A way that investors knew for a fact that they were not getting deceived, was that this act required an independent third party to verify the accuracy of the companies financial statements. This is where the Public Company Accounting Oversight Board (PCAOB) came into existence.
