How does the government interest of keeping the economy healthy and the governments “interference” in business with all the regulations they have? Don’t the regulations, such as the Sarbanes-Oxley Act, discourage business? Thoughts?

Government interference in the economy has been a debate over the years now, perfect examples such as Enron and WorldCom are government involvement in the corporate economies. Some may argue that government limitations scare away new establishments, but this doesn’t outweigh the benefits. An example is the Sarbanes-Oxley act of 2002; the intention was to improve on corporate governance (Brochet, 2010). The act focuses mostly on the cost-benefit analysis, and evidently, the institutions upon which the law was implemented have survived and have achieved stability. Further, the internal control mandate has proven to be beneficial, especially the financial markets where information is availed to stakeholders to make informed decisions on which companies are active (Brochet, 2010). Management, on the other hand, has improved the internal operations, and its controls testing has become less costly over time, this measure should surely encourage the levels of risk-taking, venture, and research and development.

References

Brochet, F. (2010). Information content of insider trades before and after the Sarbanes-Oxley Act. The Accounting Review, 85(2), 419-446.