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The Influence of the Sarbanes-Oxley Regulations on Securities Markets - Article Example

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The article 'The Influence of the Sarbanes-Oxley Regulations on Securities Markets ' is devoted to the Sarbanes-Oxley law, adopted on July 30, 2002, in the United States, and is one of the most significant events in the change of the US federal securities law in the last 60 years. The article details the actual changes that this bill has led to in the US securities market, and analyzes it…
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The Influence of the Sarbanes-Oxley Regulations on Securities Markets
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Download file to see previous pages The Sarbanes-Oxley Act of 2002 was being broadcasted by Media and US politicians that it has attained its purpose of restoring investors’ confidence in the securities market as a result of the scandals involving Enron and WorldCom. Evidence however shows otherwise.
Wallison (2004) investigated the idea that investors lost confidence in the corporate America securities market due to the scandals that have entered the American psyche as a result of scandals caused by Enron, WorldCom, and the other corporate scandals. He was aware of the fact that speeches have been made by SEC officials asserting the need for new regulations to restore this depleted investors’ confidence that business leaders, media commentators, and politicians have spoken arising out of the corporate scandals as though it were a fact. He argued that there actually was little evidence that said crisis actually occurred -- at least among investors. Wallison (2004) explained that if there was a crisis of confidence, it would seem to have been only among the political class and the media and was not in the markets or in the financial disclosure. He then inferred that the lost confidence is rather in the good sense of the nation’s political leadership.
From Wallison’s analysis of wrong perception of about alleged loss of confidence, the author was in effect saying the that it was just an act of faith among financial commentators and policymakers that the Sarbanes-Oxley Act was necessary to restore investor confidence in the securities markets after Enron and WorldCom, and the other corporate scandals of 2001 and 2002. If the author is correct then the problem is wrongly defined and necessarily the solution which the SOX will not be responsive in return. This paper tries to evaluate whether there is a basis for his claim on the basis of the evidence presented. Wallison (2004) asserted that as a result of the view of lost confidence on the part of investors, he believed that just about every new regulation proposed by the Securities and Exchange Commission (SEC) is said to be part of the process of helping investors get over their loss of confidence in the stock market and financial disclosure.  ...Download file to see next pagesRead More
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