The Sarbanes-Oxley Act a Cost-Benefit Analysis Using the...

The Journal of Applied Business Research – January/February 2010 Volume 26, Number 1 The Sarbanes-Oxley Act: A Cost-Benefit Analysis Using The U.S. Banking Industry Philip H. Siegel, Augusta State University, USA David P. Franz, San Francisco State University, USA John O’Shaughnessy, San Francisco State University, USA ABSTRACT There are many analyses of the economic effects that regulations, in general, and Sarbanes-Oxley Act, in particular, have had on American business. This analysis looks at the effect that the Sarbanes-Oxley Act has had on the American banking industry. The return on assets and return on equity were obtained from the Federal Reserve Bank for all SEC-registered and nonregistered banks for the period 2000†¦show more content†¦According to Benston (1977) an unaware public pays for government-required accounting disclosure. Sunstein (1999) claims that disclosure of information allows the federal government to control public and private conduct. Foreign Corrupt Practices Act Over the decades accounting regulations have come from various sources. The Securities and Exchange Commission as well as the Internal Revenue Service and Interstate Commerce Commission are examples of regulatory bodies that promulgate accounting regulations. A more recent example occurred during the 1 970s. During the Watergate era there were a number of investigations, some of which affected American business. One of the investigations, conducted by the Securities and Exchange Commission (SEC) in 1975, revealed that 19 publiclyheld corporations had made illegal campaign contributions and that these contributions were made from cash accounts that had not been recorded on the corporation’s books. (Heldack, 1977) This prompted the SEC to launch an investigation into what were considered ―questionable payments.â€â€" What came out of the investigation was that many U.S. multinational corporations were making hundreds of millions of dollars in ―questionable paymentsâ€â€" to foreign officials to obtain business. As a result, the Foreign Corrupt Practices Act (FCPA) was unanimously adopted by Congress in 1977. Bribery of foreign officials to obtain business for the corporationShow MoreRelatedSarbanes-Oxley Act (SOX) Essays1756 Words   |  8 PagesIntroductio n In July of 2002, Congress swiftly passed the Public Company Accounting Reform and Investors Protection Act at the time when corporations like Arthur Anderson, Enron and WorldCom fell due to fraudulent accounting practices and bad internal control. This bill, sponsored by Mike Oxley (R-OH) and Paul Sarbanes (D-MD), became known as Sarbanes-Oxley Act (SOX).It sought to restore public confidence in publicly traded companies and their accounting practices, though the companies listed aboveRead MoreImpact of Information System on Organisation and Society2470 Words   |  10 Pagesthat they will benefit from it — and from the work of corporations that support it. Recently, that confidence has been severely shaken. As the names of several top corporations have become synony-mous with corporate misconduct and financial scandal, a call for more effective corporate governance has been raised worldwide — from finan-cial reporting and internal controls to how a corporation selects, trains and evaluates its board of directors. (This article is not a legal analysis of corporate governanceRead MoreEffect of Matherial Weaknesses on Stock Exchange Market11608 Words   |  47 PagesMARKET The impact of Sarbanes Oxley Act in companies’ share price Ronnie Damonte Month Year School of Business Administration TABLE OF CONTENTS: 1. INTRODUCTION 3 1.1 Background Information. 3 1.2 Objectives of the Research. 3 1.2 Research Questions. 4 1.3 Methods. 4 2. SARBANES OXLEY ACT 5 2.1 What is the â€Å"Sarbanes Oxley Act†? 5 2.2 SOX genesis. 5 2.2.1 Toward the SOX. 5 2.2.2 The development of SOX bill. 6 2.3 Structure and contents of Sarbanes Oxley Act. 8 2.3.1 - 100sRead MoreCorporate Governance - Cost Benefit Analysis of Sarbanes Oxley18706 Words   |  75 PagesTHE BENEFITS OF SARBANES-OXLEY AND CORPORATE GOVERNANCE MEASURED AGAINST THE COSTS Salim Motala A research project submitted to the Gordon Institute of Business Science, University of Pretoria, in partial fulfilment of the requirements for the degree of Master of Business Administration. 14 November 2007 ABSTRACT The Sarbanes-Oxley Act of 2002 (SOX) is the only legislated corporate governance structure, and is aimed at increasing investor confidence in public companies by forcing themRead MoreAnalysis of the Causes and Measures of Curbing Fraud in the Banking Sector25289 Words   |  102 PagesANALYSIS OF THE CAUSES AND MEASURES OF CURBING FRAUD IN THE BANKING SECTOR. BY ESSIEN NSIKAK U. A RESEARCH PROJECT SUBMITED TO THE DEPARTMENT OF ACCOUNTING, COLLEGE OF BUSINESS AND SOCIAL SCIENCES, COVENANT UNIVERSITY, OTA. IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELOR OF SCIENCE (B.sc) DEGREE IN ACCOUNTING. CERTIFICATION I certify that this project titled â€Å"The Analysis of the causes and measures of curbing fraud in the bankingRead MoreEssay about Agency Problem26370 Words   |  106 Pagesbanks, depositary banks, custodial agents for coordination of clearance and settlement systems, accountants, lawyers and other strategic advisors to facilitate its launch. For example, thousands of ï ¬ rms from around the world list their shares in the U.S. typically in the form of American Depositary Receipts (ADRs), which can trade on major exchanges like the New York (NYSE) and American Stock Exchanges or Nasdaq (Level II or III ADRs), on over-the-counter (OTC) markets like the OTC Bulletin BoardRead MoreChapter 1 Accounting Information Systems and the Accountant14769 Words   |  60 PagesProducts Ross, Sells, and Young, LLP REFERENCES AND RECOMMENDED READINGS ANSWERS TO TEST YOURSELF WHAT’S NEW IN ACCOUNTING INFORMATION SYSTEMS? Suspicious Activity Reporting Countering Terrorism Corporate Scandals and Accounting The Sarbanes-Oxley and Patriot Acts ACCOUNTING AND IT Financial Accounting Managerial Accounting Auditing Taxation CAREERS IN ACCOUNTING INFORMATION SYSTEMS Traditional Accounting Systems Consulting Information Technology Auditing and Security After reading this chapterRead MoreCEO CFO Perceptions About AIS Impact on Firm Performance FInancial Reporting2939 Words   |  12 Pagesfraudulent activities, mainly to manipulate poor financial performance. The intertwining of ethical dilemmas and constant conflicts of interest endangered employees, shareholders, customers, and the general public. With the passing of Sarbanes-Oxley (SOX) in 2012, the act demanded, â€Å"that corporate management design and implement internal controls over the entire financial reporting process.† (Hall, 2013) In reference to CEO turnover and the appropriateness and effectiveness of a board, board of directorsRead MoreFinancial Analysis4661 Words   |  19 PagesFinal Project – Financial Analysis Beatrice Valdez, MBA Student Capella University MBA 6016 Finance and Value Creation [ May 16, 2012 ] Michael Blagg, Professor Table of Contents Executive Summary | | 3 | Historical Financial Statement Analysis: Financial Ratios | | 3-4 | Balance Sheet | | 4-6 | Income Statement | | 6 | Statement of Cash Flows | | 6 | Pro-Forma Financial Statements | | 7 | Balance Sheet Pro-Forma | | 7-8 | Income Statement Pro-Forma | | 9 | CashRead MoreInternational Business Competing in the Global Marketplace 8th Edition Charles W. L. Hill5106 Words   |  21 PagesFinancial Markets and Institutions SEVENTH EDITION The Prentice Hall Series in Finance Alexander/Sharpe/Bailey Geisst Fundamentals of Investments Megginson Investment Banking in the Financial System Andersen Corporate Finance Theory Melvin Global Derivatives: A Strategic Risk Management Perspective Bear/Moldonado-Bear Gitman International Money and Finance Principles of Managerial Finance* Principles of Managerial Finance–– Brief Edition* Mishkin/Eakins