Assessing the Deterrent Effect of the Sarbanes-Oxley Act's Certification Provisions: A Comparative Analysis Using the Foreign Corrupt Practices Act

By Lacey, Kathleen A.; George, Barbara Crutchfield et al. | Vanderbilt Journal of Transnational Law, March 2005 | Go to article overview

Assessing the Deterrent Effect of the Sarbanes-Oxley Act's Certification Provisions: A Comparative Analysis Using the Foreign Corrupt Practices Act


Lacey, Kathleen A., George, Barbara Crutchfield, Stoltenberg, Clyde, Vanderbilt Journal of Transnational Law


ABSTRACT

In the 1970s, Congress reacted to the financial wrongdoing of Lockheed Corp. and others by enacting [section] 102 of the Foreign Corrupt Practices Act (FCPA), which (1) requires corporations to keep records that accurately reflect financial transactions and (2) mandates a system of internal accounting controls. Going a step further in 2002, Congress responded to the Enron scandal by imposing personal accountability on chief executive officers in the Sarbanes-Oxley Act (SOA). After recounting responses prior to the existence of the Securities and Exchange Commission (SEC) to corporate abuses and the historical background of the SEC's requirements for corporate financial reporting and disclosure, the Authors examine whether lessons can be drawn from the FCPA experience regarding the deterrent effect of the SOA's corresponding provisions against fraudulent and unethical behavior.

TABLE OF CONTENTS

   I. INTRODUCTION
  II. HISTORICAL BACKGROUND
      A. Historical Context of Corporate Abuses
         Leading to State Action on Disclosure:
         1694-1852
      B. State Action and Federal Activities in
         the Securities Area Before the 1933 Act:
         1852-1933
      C. Chronology of Disclosure and Reporting
         Legislation: 1933-present
      D. Historical Context for Increasing Personal
         Accountability of Corporate Officers
      E. The Evolution of Corporate Abuses and the
         FCPA and SOA
III. THE SIMILARITY OF CORPORATE REPORTING
     ISSUES AND THE LEGISLATIVE RESPONSE TO
     THE WATERGATE SLUSH FUND DEBACLE AND
     RECENT ACCOUNTING FRAUD SCANDALS
     A. Reporting Issues in and the Legislative Response
        to the Watergate Slush Fund Debacle
        Resulting in Passage of the Foreign
        Corrupt Practices Act
        1. The Faulty Accounting Systems
           Used by U.S. Corporations in the
           Watergate Scandal
        2. "Voluntary Disclosure Program"
           Before the Adoption of the FCPA
        3. The Anti-Bribery and Accounting
           Provisions of the FCPA
        4. The Statutory Language That
           Expanded the Role of the SEC
     B. Reporting Issues in and the Legislative Response to
        Recent Accounting Fraud Scandals
        Resulting in the Passage of the
        Sarbanes-Oxley Act
        1. The Faulty Accounting Systems
           Used by Enron
        2. The SEC Order Requiring Certification
           of Existing Financial Statements
           Before the Adoption of the
           Sarbanes-Oxley Act
        3. Sarbanes-Oxley: Section 302's
           Certification Requirement
        4. Sarbanes-Oxley: Section 906's
           Certification Requirement
        5. SEC Rules Implementing the Provisions
           of the Sarbanes-Oxley Act
  IV. THE POSSIBILITY OF SUCCESS OF THE CEO
      CERTIFICATION PROVISIONS OF SARBANES-OXLEY
      BASED ON CURRENT LEGAL ISSUES, EXPERIENCE
      WITH THE FCPA, AND ADDITIONAL FACTORS
      A. Currently Pending Legal Issues Concerning
         the Certification Provisions of the
         Sarbanes-Oxley Act That May Negatively
         Affect Its Success
         1. Potential Due Process Concerns
         2. The Pending HealthSouth Case
      B. Following the Learning Curve (or Lack
         Thereof) of a Corporate Wrongdoer From
         the FCPA to the SOA
         1. 1976: Lockheed Bribery I--One of
            the Precipitating Factors for the
            Passage of the FCPA
         2. 1986-1992: Lockheed Bribery II--Lesson
            Ignored!
         3. 1995: Lockheed Bribery III--Lesson
            Yet Unlearned!
         4. 2004: Lockheed IV--A Change of
            Culture?
      C. Additional Factors That Can Be Used to
         Make Assumptions About the Possibility
         of Success
         1. The United States' Ranking in Transparency
            International's 2004 Corruption
            Perception Index and Its 2002
            Bribes Perception Index (as an
            Indicator of the Effect of Legislation,
            Regulation, and Judicial Decisions
            in the United States after 1977)
            a. 

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Assessing the Deterrent Effect of the Sarbanes-Oxley Act's Certification Provisions: A Comparative Analysis Using the Foreign Corrupt Practices Act
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.