Chapter 1: Behind the Boardroom Doors: Changes Underway In U.S. Corporate Governance Post Sarbanes-Oxley

The United States entered the twenty-first century in a corporate governance crisis. A series of high-profile scandals in major corporations—Enron, Worldcom, Tyco International, the New York Stock Exchange (NYSE) itself—had sharply eroded public and investor faith in how U.S. companies were being run and the corporate boards that were meant to be overseeing them. In response, the Federal Government and regulatory bodies introduced the most significant set of governance reforms in the U.S. for many decades, trying to restore public confidence in the governance of public corporations. The Sarbanes-Oxley Act (SOX) was enacted quickly in 2002, followed by major changes in the rules for publicly-traded companies adopted by the stock exchanges and the Securities and Exchange Commission (SEC).