Sarbanes - Oxley Act of 2002 and the Effect on the Business Environment

The Sarbanes - Oxley Act of 2002 is the most important piece of legislation since the 1933 and 34 securities exchange act, affecting everything from corporate governance to the accounting industry and much more. This law was in direct response to the failure of corporate governance at Enron, Tyco, and WorldCom. The Sarbanes - Oxley seeks to bring back the confidence in all publicly held corporations to the shareholders, while placing more responsibility on CEOs and CFOs for …

…corporate governance and the unethical behavior of business leaders, but it will at a minimum create greater awareness, controls and transparency for employees and shareholders. Will forcing corporations to create a Code of Business Conduct ensure ethical behavior, I doubt it. Perhaps Dennis Kozlowski and his associates would have thought twice before ignoring their fiduciary responsibility to their employees and shareholders if fines and prison terms would have been more clearly defined. I hope so.