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Regulatory Compliance
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The Economic Benefits of the Sarbanes-Oxley Act?: Evidence From a Natural Experiment
Section 404 of the Sarbanes-Oxley Act (SOX) requires firms with a public float over $75 million during 2002-2004 to file management reports beginning in 2004, but firms with a smaller float in each of the three years do not need to comply until the end of 2007. Relative to firms that could delay compliance, mandatory filers cut CEO compensation and financial slack, increase ownership by insiders, raise payouts to shareholders, and slow investment growth. These firms experience no change in borrowing costs but enjoy access to longer-term public debt.
109 days ago by Boston CollegeDriving Sarbanes-Oxley Compliance Through the StealthWatch System
The Sarbanes-Oxley Act requires that senior managers personally vouch for the accuracy of corporate financial statements. A key part of compliance, therefore, is proof that the data supporting those statements is as accurate and valid as possible. Most enterprise organizations apply a wide range of network security technologies to this problem. This complex, multi-layered approach falls short when it comes to specific Act compliance directives covering risk assessment, control activities, information and communications, and monitoring.
120 days ago by LancopePrescription for HIPAA Compliance: Is Your Organization HIPAA Healthy?
The effects of a data breach in the healthcare industry are far reaching as patients and clients lose more than personal identification information (names, addresses, social security numbers), but also sensitive and private medical information (medical conditions, medication information, treatments) that is fodder for identity theft, medical billing fraud and other criminal schemes. The results are financially dibilitating and impact an organization's credibility. Does one have the defenses in place to ward off threats of a data breach? With the ever growing use and acceptance of laptops, Smartphones, USB keys, and electronic medical records, the health industry is at an ever greater risk of exposure to data breaches.
179 days ago by UtimacoAssessment of the Sarbanes-Oxley Act on the Firm Using a Difference-in-Difference Estimator
The Sarbanes-Oxley Act (SOX) of 2002 which is also known as the Public Company Accounting Reform and Investor Protection Act promulgates the importance of effective internal control systems after a series of accounting scandals in the early 2000's in which firms misreported their earnings. The main objective for the implementation of SOX is to improve the quality and transparency of financial reports and provide investors more confidence in these financial reports by focusing more on internal controls of financial reporting by firms. More importantly, Sections 302 and 404 of this Act require publically traded companies to certify the effectiveness of their internal controls and assessment by its management that the internal controls implemented are adequate.
183 days ago by University of FloridaThe Sarbanes Oxley Act of 2002: Implications for Compensation Contracts and Managerial Risk-Taking
This paper shows that the period following the passage of the Sarbanes Oxley Act of 2002 (SOX) is associated with a significant reduction in compensation-based incentives to take risk, which is related to a decline in risky investments. Moreover, consistent with the rules in SOX directly affecting CEOs' incentives to take risk, the document that the decline in risky investments exceeds the amount that would be expected from changes in compensation packages alone. Finally, the paper documents that these effects are robust to controlling for the market decline in 2000/2001 as well as the passage of SFAS 123R.
192 days ago by New York UniversityStudy of the Sarbanes-Oxley Act of 2002 Section 404: Internal Control Over Financial Reporting Requirements
The Public Company Accounting Reform and Investor Protection Act, otherwise known as the Sarbanes-Oxley Act (the "Act"), was enacted in July 2002 after a series of high-profile corporate scandals involving companies such as Enron and Worldcom. Section 404(a) of the Act requires management to assess and report on the effectiveness of Internal Control over Financial Reporting ("ICFR"). Section 404(b) requires that an independent auditor attest to management's assessment of the effectiveness of those internal controls. Because the cost of complying with the requirements of Section 404 of the Act ("Section 404") has been generally viewed as being unexpectedly high,1 efforts to reduce the costs while retaining the effectiveness of compliance resulted in a series of reforms in 2007.
200 days ago by U.S. Securities and Exchange CommissionSarbanes-Oxley, Governance and Performance
The author studies the impact of Sarbanes-Oxley Act (SOX) on the relationship between corporate governance and company performance. Five measures of corporate governance are considered during the period 1998-2007. The author finds a negative and significant relationship between board independence and operating performance during the pre-2002 period, but a positive and significant relationship during the post-2002 period. The stock ownership of directors is consistently positively and significantly related to performance for both sub-periods.
200 days ago by University of ColoradoSeventh Amendment: Sarbanes-Oxley Act Whistleblower Claims and Jury Trials
In the early part of the twenty-first century, corporate fraud and greed led to the downfall of two major multinational corporations, Enron and WorldCom. Corporate scandals caught the attention of the general public, corporations, Wall Street, and Congress like few scandals ever have before.' The primary victims of the scandals-company employees, investors, and pensioners-suffered greatly from the companies' deceptive practices and ultimate collapses. Investigations into these debacles revealed that certain employees in these companies had identified the fraudulent practices that ultimately led to the destruction of their corporations, yet these employees were discouraged from reporting the practices because of a lack of legal protection for whistleblowers.
262 days ago by University of PennsylvaniaHIPAA Compliance: An Examination of Institutional and Market Forces
One would think that the enactment of the HIPAA, with its mandates on data security and privacy, would have brought a major shift in the security management practices within the US healthcare. Unfortunately, recent industry reports indicate low levels of regulatory compliance, thus raising security concerns for the US health IT infrastructure. This research develops a regulatory compliance model by drawing insights from the institutional theory literature to identify the key drivers influencing HIPAA compliance, both institutional and market forces (e.g., variability in state-level privacy laws comprehensiveness, interdependency between privacy and security rules, pressure from compliance leaders in the region, compliance officer's functional background, and the consumer concern for privacy).
268 days ago by Dartmouth CollegeDoes Sarbanes-Oxley Act Chase Away Foreign Firms?: Evidence From ADR Terminations
This paper provides empirical evidence of the impact of Sarbanes-Oxley Act of 2002 (SOX) on the determinants of American Depositary Receipts (ADR) terminations between 2000 and 2004. The results suggest that the implementation of SOX increased the propensity of foreign firms to terminate their ADR programs and decreases the optimal duration of ADR programs. Pre-SOX, foreign firms with high Market-to-Book and high Sales Growth are less likely to terminate their ADR programs from U.S. capital markets explainable with a need to finance their growth opportunities. Post-SOX, high Market-to-Book and two years annualized sales growth firms are more likely to terminate existing ADRs and likely seek bonding with other large capital markets not subject to SOX regulations.
340 days ago by University of St. Thomas
