Reference no: EM133493675

Case Study: Brigham and Ehrhardt (2022) argue that SOX has changed the structure of corporate compensation packages. Instead of taking stock options as a large part of their compensation package, many managers changed to another format, including cash, which affected the bottom line of many companies. Stock options were a standard part of a company executive's compensation plan. When the executive needed cash, the company would loan them money against the value of their stock, and the executive had to use the cash value of the stock without having to sell it.

Brigham and Ehrhardt (2022) postulated that the SOX Act created new standards for corporate accountability and new penalties for acts of wrongdoing. The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. It changes how corporate boards and executives interact with corporate auditors. It removes the defense of "I was not aware of financial issues" from CEOs and CFOs, holding them accountable for the accuracy of financial statements.

Question: Brigham and Ehrhardt (2022) further postulated that the Sarbanes-Oxley Act created a standard for corporate accountability and new penalties for acts of wrongdoing. It changes how corporate boards and executives interact with corporate auditors. It removes the defense of "I was not aware of financial issues" from CEOs and CFOs, holding them accountable for the accuracy of financial statements. The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. Does SOX protect investors by improving the accuracy and reliability of corporate disclosures according to securities laws?