Purpose of the Sarbanes-Oxley Act

Easy Corporate Governance Regulatory Environment

The regulatory environment plays a crucial role in corporate governance, ensuring that companies adhere to certain standards and practices. One key regulation is the Sarbanes-Oxley Act, which was enacted in the United States in 2002. This act was a response to major corporate scandals and aimed at increasing transparency in financial reporting and holding corporate executives accountable for inaccuracies.

Which of the following statements best describes the primary purpose of the Sarbanes-Oxley Act?

To reduce the tax burden on corporations.

To enhance the accuracy and reliability of corporate disclosures.

To eliminate insider trading by regulating stock market transactions.

Hint

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