Public Company Accounting Reform and Investor Protection in the Post-Enron Era: The Implications for Restoring the Credibility of China's Stock Market

摘要

This Sarbanes-Oxley Act (SOX) of 2002 attempts to build trust and confidence for investors and stakeholders. The act created a regulatory body for accountants who audit public companies, it improved corporate governance and reporting obligations, developed the quality and clearness of financial reporting and auditing, protected the objectivity of research analysts and toughen penalties for securities law violations. The provisions of the Act apply to both US companies and foreign companies. Chinese corporations have aggressively expanded their territory into the US stock exchanges through public listing or acquisitions. The SOX has an enormous impact on these listing Chinese corporations, especially if they are aspiring to go public in the United States. China has undergone financial reforms over the past two decades and faces many urgent issues nowadays. The credibility of the corporate board, the independence of auditors, the reliability of financial disclosures, the accountability of financial and corporate fraud, the authority and effectiveness of the regulatory agencies are all severe problems and challenges for modernizing Chinese financial markets. This paper reviews the provisions of the SOX, examines the existing problems of China's financial markets, and proposes some suggestions to restore investor confidence and the credibility of financial market in China.