How Harsh Should the Legislation Be to Prevent Financial Crimes?

Document Type

Book Chapter

Source of Publication

Advances in Finance, Accounting, and Economics

Publication Date

1-1-2023

Abstract

The collapse of Enron and its auditor Arthur Andersen was one of the biggest events in US corporate history and it had long-lasting repercussions in the corporate world. Following the Enron – Arthur Andersen scandal, the US Congress passed the Sarbanes Oxley Act (SOX). The legislation was designed to strengthen existing securities regulations and enacted harsh penalties on lawbreakers. SOX was one of the first and heavy responses to corporate fraud. Since the passage of SOX, debates revolving around the costs and benefits of it have prevailed and several studies investigated its effectiveness to prevent future financial crimes. This study first reviews the chronology of the events leading to SOX, followed by a brief discussion of the rules and regulations established by SOX. The empirical evidence presented by previous studies on the effectiveness of legislation and the harsh penalty Enron's auditor had received are assessed and evaluated.

ISBN

9781668485873, 9781668485897

ISSN

2327-5685

Publisher

IGI Global

First Page

37

Last Page

50

Disciplines

Business

Indexed in Scopus

no

Open Access

no

Link to Full Text

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