Sarbanes-Oxley Act Case

I agree with many opinions talking about Sarbanes-Oxley Act (SOX) of 2002. The purpose of SOX is to strengthen the company's responsibility, to protect the interests of investors from public companies, the core idea is: not only to improve the timeliness and accuracy of public company financial reporting but also can effectively protect the interests of the public company investors; strengthening company executives' financial reporting responsibilities, providing independence of the external audit, will help to improve the quality content of the company's financial reporting and disclosure of information given.

The con is the extremely high cost for companies. According to Financial Executives International (FEI) survey form of 321 companies, each large enterprise need to comply with Sarbanes-Oxley Act of the United States in the first year, the total cost is more than 4.6 million dollars. These costs include the 35,000 hours of internal staff inputs, external consultants and software costs $ 1.3 million. The General Electric Company says they have already spent up to $ 30 million on Section 404. Also high cost and harsh conditions reduce the number which companies go public.

In 1999, the number of company delisting in American stock market is 30. However, the number has risen to 135 in 2004. There is no evidence the proof SOX is the mean reason, but in my opinion, it should be a reason that increased the number.

Sarbanes Oxley Act of 2002 providing a low risk, fair and regulated market of course, and I also agreed many of my classmates that the advantage is more than disadvantage. Unregulated market easily goes to extremes, like Enron, Adelphia, and WorldCom case happened. But the highly regulated by government are not conducive to economic development and may reduce the financial markets competitive. I think Sarbanes Oxley Act of 2002 is special law in an extraordinary period, But with the restoration of investor confidence, Sarbanes Oxley Act of 2002 need to modify by government to improve capital markets competitive.

Also, in China, there are many listed companies involving financial fraud, not only impact the confidence of the capital markets, but also makes the reputation of listed companies at stake. Everyone in China is looking for a "Chinese-style Sarbanes-Oxley Act", but I think external supervision is only small part for China's capital market; they also need long-term corporate financial