Sarbanes-Oxlety Act of 2002
Sarbanes-Oxlety Act of 2002 is a federal law that imposes certain rules and practices on the record keeping of companies. This law came after some scandals that broke out around the 2000’s. An example of this is the Tyco Corporate scandal of 2002, where Kozlowski and CFO Mark Swartz violated the Securities Exchange Act of 1934, hiding company information as well as inflating earnings (2006, April 17). Sarbox was created with the idea of passing regulations to prevent companies from inflating information on their financial statements, which would result in the distrust of investors. The largest public companies shouldn’t be the only ones subject to the Sarbanes-Oxley Act because every corporation should be under their supervision to protect investors and maintain confidence in the market.
Sarban-Oxley Act regulations on small companies could have several benefits. Investors would show more interest in these businesses since they are being supervised by this federal law, the risks in their investments would be less. Besides there should be no exceptions to these regulations since no matter the size of the company there will always be people affected when a business hides its true debts and profits. In addition, this would allow these businesses to enter a more concentrated market, where they could improve and develop the services they offer. Sarban-Oxley Act regulations on large and small companies would more extensively cleanse the market of less financially reliable companies.
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