Final answer:
The Sarbanes-Oxley Act of 2002 results in increased transparency, enhanced corporate governance, and stronger auditing standards. It was enacted in response to financial scandals and aimed at safeguarding investors by ensuring the reliability of corporate financial information.The correct option is A.
Step-by-step explanation:
The enactment of the Sarbanes-Oxley Act of 2002 has resulted in several key outcomes pertaining to corporate governance and financial practices. The correct answer to the question is a) Increased transparency. This piece of legislation was designed in response to major accounting scandals, with the intention of protecting investors by improving the accuracy and reliability of corporate disclosures
The Act did not reduce regulations, lower corporate governance, or weaken auditing standards; rather, it enhanced financial transparency, strengthened corporate governance by holding managers and executives accountable, and bolstered auditing standards to ensure the integrity of financial statements.
Critical components of the Sarbanes-Oxley Act include requiring top management to certify the accuracy of financial statements, imposition of more stringent penalties for fraudulent financial activity, and increasing the independence of the outside auditors who review the accuracy of corporate financial statements
These measures collectively aim to prevent the recurrence of financial fraud cases like those seen with Enron, Tyco International, and WorldCom, which severely undermined investor confidence and shook the market.
The Act also emphasizes the important role of the board of directors, which is elected by shareholders and serves as the principal agent of corporate governance. It mandates that the board be equipped with the necessary oversight capabilities over the company's executives and financial reporting process.
Additionally, it places greater emphasis on the role of auditing firms and encourages vigilance among investors, especially those managing large funds, as part of the corporate governance ecosystem.The correct option is A.