INTRODUCTION
In the beginning of the 21st century, stories of corporate scandal dominated the American media landscape, most notably from Enron Corp., WorldCom and accounting firm Arthur Andersen. In the case of Enron and Arthur Andersen, “Andersen proposed that the energy company make "adjustments" that would have cut its annual income by almost 50 percent…Enron chose not to make those adjustments and Andersen put its stamp of approval on the company's financial report anyway.” (Hilzenrath, 2001) In the case of WorldCom, finance chief Scott D. Sullivan “said he repeatedly warned the former chief executive [Bernard Ebbers] of accounting problems at WorldCom, but was told it had to "hit the numbers" anyway.” (Latour & Young, 2005) In addition, Arthur Andersen was negligent in its audit responsibilities with WorldCom, as “audit authorities say the long distance carrier's ruse was so rudimentary it should have been obvious to Andersen auditors.” (Authorities Say, 2002) These scandals violated the Conceptual Framework of Accounting, generating financial reports that were unreliable, not consistently prepared, and purposefully deceptive to investors. In reaction to these deceptive practices and the resultant investor confidence crisis, Congress passed the Public Company Accounting Reform and Investor Protection Act on July 30, 2002. This act is more commonly referred to as the Sarbanes-Oxley Act (SOX), named for former Senator Paul Sarbanes and former Congressman Michael Oxley, who co-sponsored the bill.
As the six-year anniversary of the Act’s passage approaches, SOX still has a major impact on corporations. However, “it is still not clear when, exactly, the dust will settle. In fact, while many lawmakers, academics, ...