Drs. O.C. and Linda Ferrell recently had their research on the effectiveness of the Sarbanes-Oxley Act featured in the mid-October issue of the Canadian accounting magazine The Bottom Line. The full-page article discussed the significance of the Ferrells’ research and their subsequent conclusion. Both O.C. and Linda are Belmont University distinguished professors of leadership & business ethics.
The goal of the Ferrells’ research on the Sarbanes-Oxley Act, passed in 2002, was to determine the effectiveness of the new law requiring companies to state whether they have adopted a specific code of ethics for principal, financial and accounting officers. Section 406 of the act, the section the study focused on, was intended to assist in reducing financial misconduct and address inherent risks public companies face in finance and accounting.
The Ferrells’ study began in 2005 and lasted for 11 years, reaching the conclusion that Section 406 of the Sarbanes-Oxley Act was indeed effective in lowering the restatement of earnings often associated with financial mismanagement.
For more information on the Ferrells’ research and findings, click here.