Sarbanes Oxley Act Assignment Help on short run and long run: Ramifications of the Sarbanes-Oxley Act in the short run and long run Continuous corporate accounting scandals in 2001 and 2002, like collapse of Enron, headed Congress to authorize the Sarbanes-Oxley Act of 2002. The law was created with an aim to reinforce financial reporting standards for publicly traded companies and give improved protection to investors. From the time, law is implemented it has significant ramifications in short run, but its ramifications in long-run are not clear.
In short run, the law has made a positive effect on strengthening corporate governance in American publically traded companies.The central provision of the law, identified as Section 404, has directed companies’ top management to certify their companies’ financial reports. as per assignment help experts in addition to the positive effect of the act in short run, it also affects companies due to high costs involved in complying with the requirements of Sarbanes-Oxley. In short-run, companies, especially smaller ones find it really costly to implement and abide by the law and its requirements. The companies are forced to pay millions to implement this act. The high compliance costs have directed several small-scale companies to delist themselves from the U.S. stock market.
The law is helpful for firms in identifying weaknesses in their financial controls in short run, but how it would impact it in long run is not so clear. Some scholars and leaders believe that this law will direct corporate leaders to spend more money and time on maintaining financial compliance in long run so that they can attain their long-term growth strategies. It is also possible that in long run, companies may become able to make use of significant financial compliance, which would direct all employees towards behaving ethically and maintaining corporate governance. The legal challenges regarding the law also make it difficult to identify its implications in long run.
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