Dodd-Frank and Sarbanes-Oxley Acts:
Dodd-Frank and Sarbanes-Oxley Acts are important legislations in the corporate world because of their link to public and privately held companies. Sarbanes-Oxley Act was enacted to enhance transparency and accountability in publicly traded companies. On the contrary, Dodd-Frank Act was enacted to disentangle the confused web of financial service company valuations. Actually, these valuations are usually hidden by complex and unclear financial instruments. The introduction of Sarbanes-Oxley Act was fueled by recent incidents of accounting frauds by top executives of major corporations such as Enron. In contrast, Dodd-Frank Act was enacted as a response to the tendency by banks, insurance companies, hedge funds, rating agencies, and accounting companies to serve up harmful offer of ruined assets and liabilities brought by systemic non-disclosure (Anand, 2011, p.1). While these regulations have some similarities and differences, they have a strong relationship with the financial markets.
Relationship between the Acts and Financial Markets:
Since they are financial legislation, Sarbanes-Oxley Act and Dodd-Frank Act have strong relationship with the modern financial markets. This relationship is mainly attributed to the implications that the acts have on market participants, regulators, investors, and markets in general. These acts primarily focus on promoting the health and vitality of financial markets by addressing several practices that could have considerable negative effects on market participants and the economy in general. Actually, Dodd-Frank, which is arguably the most important financial legislation in modern economy, brought significant changes that contributed to changes in th…
…ank Act applies to existing current or former executives (Goodman, Olson & Fontenot, 2010, p.72). Consequently, Dodd-Frank executes a three-year lookback period while the Sarbanes-Oxley Act implements a one-year lookback period.Conclusion:
Sarbanes-Oxley Act and Dodd-Frank Act are some of the most important regulations in the modern financial environment. The significance of these regulations is attributed to their focus on promoting the vitality of financial markets through addressing complexities in financial procedures and preventing financial wrongdoing. The enactment of these regulations was fueled by some financial irregularities in the corporate world and some major players in the financial markets. Despite the strong link between these laws and the financial markets, they have some similarities and differences in light of their respective objectives.