How has the Sarbanes-Oxley Act (SOX) and the Public Company Accounting Oversight Board (PCAOB) affected corporate governance of US companies? Do the benefits of improved disclosure justify the additional disclosure costs? Who gains the most benefit from these disclosures?
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How has the Sarbanes-Oxley Act (SOX) and the Public Company Accounting Oversight Board (PCAOB) affected corporate governance of US companies?
-- The PCAOB was created as an act of SOX. Basically, the PCAOB exists solely because of SOX. SOX was created as a reaction to the accounting scandals that took place in the early 2000's. When companies as large as Enron collapse, the market actually shakes, and it becomes a detriment. WorldCom came next, followed by others. When the scandals took place, investor confidence fell to an all-time low. Investors screamed, and rightly so. In order to improve the confidence ...
This solution discusses the SOX Act and the PCAOB. The questions presented are thoroughly addressed.