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Impact of Governmental Regulation Upon Business

How do government regulatory agencies and laws impact business organizations?

Give example of specific governmental regulatory requirements and explain what impact they have on business organizations.

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For the most part, laws and regulations made by the government help to 'level' playing fields, help to stabilize industries and the economy as a whole, and create a situation where competition is kept in check by a system of ethics, morals, and safeguards.

Governmental regulations and laws impact businesses in several ways. For one, in most cases they create additional costs for the firms involved either by mandating such courses of action that are so labor intensive so as to cause the firm to need additional employees or by creating situations where the firm is required to keep extra assets on hand.

For example, consider Sarbanes Oxley (SOx). Sarbanes Oxley is a set of federal mandates concerning financial reporting practices of publicly traded companies. SOx was the resulting legislation following the debacles at Enron and Worldcom. SOx requires several things of firms including extra reporting and internal auditing procedures, the separation of accounting and audit ...

Solution Summary

The solution describes the impact of governmental regulation upon business and provides examples.