Impact of the Sarbanes‐Oxley Act upon management: a behavioural discussion

Abstract

Purpose

The purpose of this paper is to demonstrate the value of behavioural psychology when considering the effects of legislation on senior management behaviour. Use is made of the Sarbanes‐Oxley Act of 2002 and the corporate failures that led to its passage.

Design/methodology/approach

The insights of behavioural psychology are discussed and then applied to the situation of senior management faced with reacting to new legislation.

Findings

It is found that this approach predicts that the effects on management behaviour may be greater than (and in any case will be different from) the effects resulting from using a more traditional approach of law and economics

Research limitations/implications

No original research is performed. It does however show that further research using this approach has much potential.

Practical implications

As the paper looks at the effect of legislation on management behaviour this paper shows the value of the behavioural approach to both those who propose legislation and those who study its effects.

Originality/value

No original work is presented but the paper is useful in showing readers not familiar with this approach of its usefulness.

Citation

Linsley, C. and Linsley, C. (2008), "Impact of the Sarbanes‐Oxley Act upon management: a behavioural discussion", Managerial Auditing Journal, Vol. 23 No. 4, pp. 313-327. https://doi.org/10.1108/02686900810864282