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1 – 10 of over 2000
Article
Publication date: 1 March 2006

Paul Herz and Paul McGurr

In response to corporate scandals the USA issued the Sarbanes‐Oxley Act to promote corporate responsibility for financial reporting. Some see the impact of the US…

Abstract

Purpose

In response to corporate scandals the USA issued the Sarbanes‐Oxley Act to promote corporate responsibility for financial reporting. Some see the impact of the US legislation crossing borders and influencing the nature of financial reporting in other countries. The purpose of this paper is to investigate whether or not there have been increases in transparency in non‐US financial markets, specifically in South East Asia, suggesting a ripple effect as a result of the Sarbanes‐Oxley Act.

Design/methodology/approach

The study examines the audited financial statements of 92 South East Asian companies issued before and after the Sarbanes‐Oxley legislation to note any significant increase in transparency. As a proxy for transparency, the study examines the number of footnotes included in audited financial statements.

Findings

The results indicate a statistically significant increase in the number of footnotes in the positive direction. Because of this increase, a changing trend of increased transparency is suggested in South East Asia.

Originality/value

In 2002 the USA passed the Sarbanes‐Oxley Act to promote corporate responsibility for financial reporting. Some see this US legislation creating a ripple effect on financial reporting in other countries. The findings of this study suggest a changing trend of increased transparency in financial reporting in South East Asia. Although this trend cannot be directly attributed to the effects of the Sarbanes‐Oxley Act, it appears to be related to a larger, more transcendent worldwide reform movement towards increased corporate responsibility and financial reporting to which the Sarbanes‐Oxley Act appears to have served as a catalyst.

Details

Asian Review of Accounting, vol. 14 no. 1/2
Type: Research Article
ISSN: 1321-7348

Keywords

Article
Publication date: 1 August 2005

David O. Stephens

The purpose of this article is to examine the potential of The Sarbanes‐Oxley Act on financial accounting systems in publicly‐held companies.

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Abstract

Purpose

The purpose of this article is to examine the potential of The Sarbanes‐Oxley Act on financial accounting systems in publicly‐held companies.

Design/methodology/approach

This article examines the Public Company Accounting Reform and Investor Protection Act 2002, commonly referred to as The Sarbanes‐Oxley Act, enacted by the US Congress in the wake of a series of business scandals in the USA. The focus is on the records management implications of the act.

Findings

The Sarbanes‐Oxley clearly has the potential to elevate the records management function to a new and higher level than it has ever enjoyed in the life of US business corporations. Future developments must be watched to see whether this proves to be the case.

Originality/value

This article will be helpful to those with more than just a passing interest in the significant happenings affecting records management in the USA.

Details

Records Management Journal, vol. 15 no. 2
Type: Research Article
ISSN: 0956-5698

Keywords

Abstract

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-0-76231-239-9

Article
Publication date: 12 April 2011

James A. Millar and B. Wade Bowen

As a result of scandals concerning major financial crime in the early twenty‐first century, including accounting and auditing fraud and inappropriate behavior by directors

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Abstract

Purpose

As a result of scandals concerning major financial crime in the early twenty‐first century, including accounting and auditing fraud and inappropriate behavior by directors on the boards of US corporations, Congress hurriedly enacted the Sarbanes‐Oxley Act (SOX) in 2002. SOX's major purpose was to restore investor confidence in America's securities markets. Small firms argued that their cost of compliance was very heavy and that their burden was greater than for larger firms, especially the costs related to section 404 of the Act, which dealt with new requirements to obtain independent audit opinions. The authors found no empirical research that supports or denies these claims. Subsequently, in 2007, the Securities and Exchange Commission reduced the Act's new audit requirements for small companies. This paper aims to examine audit fees for large and small firms.

Design/methodology/approach

The study examines actual audit fee data to investigate the increased costs paid by publicly traded companies to independent audit firms for their services due to Sarbanes‐Oxley. The authors use univariate and multivariate statistical methods to compare increases in audit fees paid by samples of 150 large firms and 150 small firms.

Findings

The study finds that both small and large firms incurred increased audit fees due to compliance with Sarbanes‐Oxley, and that small companies did incur larger increases in their cost burden.

Originality/value

The study uses actual audit fee data reported to the Securities and Exchange Commission and controls for other factors that determine audit fees in reaching its conclusions.

Details

Corporate Governance: The international journal of business in society, vol. 11 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 1 April 2004

Mehenna Yakhou and Vernon P. Dorweiler

Adopting the Sarbanes‐Oxley Act has provided impetus to reforming corporate accounting and corporate governance. Implementation of this legislation is so broad as to move…

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Abstract

Adopting the Sarbanes‐Oxley Act has provided impetus to reforming corporate accounting and corporate governance. Implementation of this legislation is so broad as to move from mere statutory compliance, to provide authority for changes in the professions of accountants and corporate officers and corporate counsel. This paper describes effects of the Sarbanes‐Oxley Act (Public Law No. 107‐204, Sec. 1‐1107) on the principal management and control functions of the business environment.

Details

Managerial Auditing Journal, vol. 19 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 September 2007

Abbass F. Alkhafaji

The purpose of this paper is to evaluate recent corporate failures and their effect on financial statements, as well as the measures being taken to rebuild trust in…

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Abstract

Purpose

The purpose of this paper is to evaluate recent corporate failures and their effect on financial statements, as well as the measures being taken to rebuild trust in corporate America.

Design/methodology/approach

Looks at how corporate governance in the USA is undergoing comprehensive reforms, particularly the significant Sarbanes‐Oxley Act.

Findings

Measures to rebuild trust in corporate America are being implemented.

Originality/value

The paper is of value by showing how the Sarbanes‐Oxley Act is by far is the most important legislative act governing business in the beginning of the twenty‐first century.

Details

Competitiveness Review: An International Business Journal, vol. 17 no. 3
Type: Research Article
ISSN: 1059-5422

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Article
Publication date: 23 November 2010

David B.H. Martin and Brandon K. Gay

The purpose of the paper is to summarize and discuss selected investor‐protection and other related enhancements to federal securities regulation contained in the…

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Abstract

Purpose

The purpose of the paper is to summarize and discuss selected investor‐protection and other related enhancements to federal securities regulation contained in the Dodd‐Frank Wall Street Reform and Consumer Protection Act.

Design/methodology/approach

The paper discusses the following investor protections and related enhancements: enhanced whistleblower incentives and protections; expanded SEC investor‐protection administrative functions including the establishment of an Office of the Investor Advocate, the appointment of an Ombudsman, and the establishment on a permanent basis of an Investor Advisory Committee; expanded enforcement authority against aiders and abettors of securities violations; evaluation of the existing standards of care employed by broker‐dealers and investment advisers; a narrowing of exemptions from registration under the Securities Act, including by directing the SEC to enact rules to disqualify “bad actors” from relying on Rule 506 of Regulation D and adjusting the definition of “accredited investor” for purposes of the SEC's rules under the Securities Act; an exemption for certain small companies from the auditor attestation requirements of Sarbanes‐Oxley; provisions to increase the oversight and accountability of credit rating agencies; and steps to bolster the regulatory oversight of the municipal securities market, including by creating a new class of regulated intermediaries – “municipal advisors”

Findings

The Dodd‐Frank Act leaves many critical issues to be fleshed out through further SEC rulemaking and in the implementation phase, including: procedures regarding whistleblower information submitted to the SEC; the actual role of the Office of the Investor Advocate; whether the SEC will adopt a broker‐dealer fiduciary‐duty standard of care; additional texture on rules disqualifying bad actors from relying on Rule 506 of Regulation D; adjustments to net worth requirements related to accredited investor status; rules on disclosure of credit ratings in registration statements; and qualification standards for municipal advisors.

Practical implications

Public companies and other persons affected by the Dodd‐Frank Act should: keep abreast of key developments in the rulemaking phase; possibly participate in the rulemaking process: develop realistic strategies to respond to the proposed rules; develop compliance action plans; and review whistleblower‐related compliance policies and procedures.

Originality/value

The paper provides expert guidance from experienced securities and financial services lawyers.

Details

Journal of Investment Compliance, vol. 11 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Abstract

This chapter explores the advantages (for large investors) of directly owning productive assets, compared with indirect ownership through stock in corporations. Significant factors are agency costs and recent changes in the tax and regulatory environment. Recent corporate scandals have led to legislative and regulatory responses that significantly increase the monitoring costs and other burdens of becoming or remaining a public corporation. As a result, there has been a substantial increase in going-private transactions, particularly among smaller public companies. Acquisitions and minority equity positions that allow large corporations to join with smaller companies have also increased. The pressures to go private are not entirely new, however. This chapter, reflecting collaboration by professors of finance and business law, traces the legal concept that the corporation is an entity separate and apart from its owners, showing how the legal status of corporations hinders resolution of conflicts among the parties to the enterprise. Thus, there have long been fundamental flaws inherent in the corporation as the form of organization for certain activities. The current wave of Sarbanes–Oxley restructuring via private equity firms is part of a significant increase in direct ownership of major assets by institutional investors. Direct ownership prevents management expropriation of resources, and is preferable to corporate ownership whenever other alternatives for indemnification or liability limitation are available (such as insurance, limited partnerships, limited liability companies, etc.). Finally, the renewal of direct ownership is not a radical shift, but a return to long-established tradition in the organization of business activities.

Details

Research in Finance
Type: Book
ISBN: 978-1-78190-759-7

Article
Publication date: 28 October 2007

Hassan R. HassabElnaby, Amal Said and Glenn Wolfe

In this study we examine the oversight responsibilities of audit committees in the post Sarbanes‐Oxley Act of 2002 (SOX) era. The results show that audit committee…

Abstract

In this study we examine the oversight responsibilities of audit committees in the post Sarbanes‐Oxley Act of 2002 (SOX) era. The results show that audit committee oversight responsibilities assigned and disclosed in proxy statements expanded post‐SOX compared to pre‐SOX. We design a survey instrument to measure the difference between the perceived oversight responsibilities of audit committee members and the oversight responsibilities actually assigned in the proxy. Our results indicate that although audit committees made a substantial commitment to increase their assigned responsibilities over the period of 2001 to 2004, they still need to do more to meet the many additional challenges facing them in a post‐SOX environment. Overall, our results suggest that the intent of SOX‐for audit committees to be more involved and active in the oversight role of an organization‐is becoming institutionalized. These results should be interesting to policy makers, a variety of interest groups, and accounting researchers.

Details

American Journal of Business, vol. 22 no. 2
Type: Research Article
ISSN: 1935-5181

Keywords

Article
Publication date: 18 April 2008

Colin Linsley and Christine Linsley

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…

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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.

Details

Managerial Auditing Journal, vol. 23 no. 4
Type: Research Article
ISSN: 0268-6902

Keywords

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