![]() Even if we assume that the strictures of the act will be effective, they will only reduce or prevent losses for those companies where losses from financial fraud would have occurred but for the act’s requirements. Opponents note that imposition of civil or criminal penalties after the fact–the way that financial fraud has traditionally been handled–would have been sufficient, and that it is not good policy to burden all businesses in order to catch a few wrongdoers. Supporters of the act have argued that Ebbers’s wrongdoing demonstrates the need for a law that mandates strict oversight of corporate managements. ![]() The recent conviction of Bernard Ebbers, the former chairman of WorldCom, has once again raised the question of whether the Sarbanes-Oxley Act was necessary or cost-effective. This essay is available here as an Adobe Acrobat PDF.
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