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Accidentally in the Public Interest: The Perfect Storm that Yielded the Sarbanes-Oxley Act
Joseph Canada, University of Central Florida
John R Kuhn, University of Central Florida
Steve G. Sutton, University of Central Florida and University of Melbourne
ABSTRACT. Protests over the U.S. Sarbanes-Oxley Act have mounted pressure to ease the impact on foreign and smaller companies. The rhetoric consists of three issues: (1) the imperialistic nature of the U.S. legislation, (2) the abnormal fashion in which the Act progressed through the legislative process, and (3) the balance between costs and benefits of the requirements. This study focuses on understanding the intent of Sarbanes, the perfect storm that developed and carried the bill through the legislative process, and the debate over costs. A simultaneous combination of intense scrutiny by the press, another major financial scandal (WorldCom), and a Senate committee reliant on SEC Chairman Levitt’s corporate governance proposals created a storm that resulted in legislation that almost by accident created one of the greatest investor protections in history. The benefits appear to outweigh the costs.
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