Why is the Sarbanes-Oxley Act significant?

The Sarbanes-Oxley Act is significant primarily because it enhanced standards for public company boards and financial reporting. This legislation was enacted in response to major accounting scandals and corporate frauds in the early 2000s, such as those involving Enron and WorldCom. The Act established stricter regulations aimed at improving the accuracy and reliability of corporate disclosures, thereby increasing investor confidence in the financial markets.

Key provisions of the Sarbanes-Oxley Act include the requirement for companies to establish internal controls and procedures for financial reporting, the obligation for executives to personally certify the accuracy of financial statements, and the establishment of the Public Company Accounting Oversight Board (PCAOB) to oversee the audits of public companies. This act not only aimed to protect investors but also sought to restore trust in the integrity of corporate financial reporting.

In contrast, the other options relate to different aspects of business regulations. While sustainability in business practices is increasingly relevant, it is not the primary focus of the Sarbanes-Oxley Act. International trade agreements are governed by distinct laws and organizations, making them separate from the concerns addressed by this Act. Lastly, while executive compensation has been a topic of discussion in corporate governance, the Sarbanes-Oxley Act