What is the primary purpose of the Sarbanes-Oxley Act?

The primary purpose of the Sarbanes-Oxley Act is to enhance corporate governance and accountability. This legislation, enacted in response to corporate scandals like those involving Enron and WorldCom, aims to protect investors by improving the accuracy and reliability of corporate disclosures.

The act established stricter oversight of financial reporting practices, increased transparency requirements, and mandated that corporate executives take personal responsibility for the accuracy of financial statements. It also created the Public Company Accounting Oversight Board (PCAOB), which oversees the audits of public companies to further ensure compliance with accounting standards.

The measures introduced by the Sarbanes-Oxley Act foster greater trust in the financial markets by holding companies accountable for their financial practices, thus helping to prevent fraud and protect shareholders. This reflects the overall objectives of raising standards in corporate governance rather than promoting tax evasion, increasing profits without accountability, or restricting access to financial information.