ACC 599 Assignment 1: Impact of the Sarbanes-Oxley Act (SOX). Strayer University.
Impact of the Sarbanes-Oxley Act (SOX)
A publicly traded company is
... [Show More] a company with permission to sell its stock to the public.
The main reason why companies go public is for growth. This occurs through selling its securities, which in return raises capital. For a company to determine whether to go public or not, it puts into consideration its size and the industry it serves. The decision to go public may be a smart move for company but should be thought out carefully.
Going public is essential for a medium sized company, especially if it needs working capital. Every business requires funds to operate and if the interest is on a fixed interest basis, the business becomes vulnerable to failure (Chandra, 2011).
Another benefit of going public is issuing shares increases the capital available to a company. When the company can issue additional shares, this may increase its equity capital. Potential investors have the opportunity to invest money into the business for a return. In turn, this also attracts leading executives who have an interest in the operations of the business.
Majority of US organizations are corporations with a board of directors, a CEO and a group of stakeholders. How an organization is operated and funded is typically determined by upper management. The board of directors tends to set the tone of rules and regulations within the corporation. It should be the responsibility of each member of management including board of directors to create a safe work environment for all employees. This particular responsibility should also include investors. As a stakeholder, they have the responsibility and capability as to how their investment is utilized.
Privately held entities has its own benefits and have the opportunity to achieve its goals in their own way. There is independence in choosing the board members and investors do not get to
choose the board members (Houtz, 2011). The company’s top management is able to select professional candidates to sit in the board. These board members are able to give crucial advice on how to attain various goals, can evaluate strategies, and come up with solutions. [Show Less]