Final answer:
The Sarbanes-Oxley Act was enacted primarily to restore investor confidence and protect them from accounting fraud following major scandals at Enron, Tyco, and WorldCom. It seeks to enhance corporate governance and transparency in the financial statements of public companies.
Step-by-step explanation:
The primary reason that the Sarbanes-Oxley Act (SOX) was passed in the U.S. was to increase confidence in financial information provided by public corporations and, more importantly, to protect investors from accounting fraud. This legislative act came in response to a series of major accounting scandals, most notably involving corporations such as Enron, Tyco International, and WorldCom. These scandals undermined investor trust in the financial statements of public companies and prompted the government to take action to enhance corporate governance and to establish stringent new standards for public company boards, management, and public accounting firms.
The subsequent regulations mandated by SOX were aimed at improving the accuracy and reliability of corporate disclosures and to prevent corporate and accounting scandals in the future. Furthermore, it sought to address the issues of bank regulators' accountability, particularly in light of the questions raised following the recession of 2008-2009 about the anticipation and prevention of banks' financial instability. Thus, SOX serves to promote financial stability in the United States by improving accountability and transparency within the financial system.