Final answer:
The primary purpose of the Sarbanes-Oxley Act is to ensure corporate accountability and transparency following major corporate scandals. It aims to protect investors by imposing strict regulations on public corporations to prevent accounting fraud, thereby promoting financial stability and confidence in the U.S. financial system. A) Ensuring corporate accountability and transparency
Step-by-step explanation:
The primary purpose of the Sarbanes-Oxley Act is A) Ensuring corporate accountability and transparency. This legislation was enacted in 2002 in response to a series of major accounting scandals involving corporations such as Enron, Tyco International, and WorldCom. The overarching goal of Sarbanes-Oxley is to protect investors by increasing the reliance they can place on the financial information that public corporations provide.
The Sarbanes-Oxley Act is a key legislative framework that affects publicly listed companies in the United States, mandating that they adhere to new or enhanced standards for all US public company boards, management, and public accounting firms. The provisions of the Sarbanes-Oxley Act are extensive and cover everything from corporate responsibility for financial reports to criminal penalties for manipulation of financial records.
While the Sarbanes-Oxley Act was designed to increase confidence in the corporate financial reporting of public companies, it is also utilized to promote the financial stability of the United States by improving accountability and transparency in the financial system. By doing so, the Act contributes towards the goal of ending “too big to fail” scenarios, protecting American taxpayers from bailouts, and safeguarding consumers from abusive financial services practices.