What is the purpose of the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act, enacted in 2002, primarily aims to protect investors by improving the accuracy and reliability of corporate disclosures. This legislation was a response to major corporate and accounting scandals, such as those involving Enron and WorldCom, which highlighted significant issues in financial reporting and corporate governance. By implementing stricter regulations for financial reporting and requiring companies to maintain adequate internal controls, the act seeks to deter corporate fraud and enhance investor confidence in the transparency of financial statements. This ultimately benefits investors by providing them with more reliable information, enabling them to make informed decisions regarding their investments.

The other options address different areas that are not directly related to the Sarbanes-Oxley Act's primary focus on financial reporting and corporate governance. For example, regulating interest rates for banks falls under the purview of financial regulatory bodies and is not a function of this act. Similarly, corporate mergers and employee rights, while important topics in their own right, do not align with the main objectives of the Sarbanes-Oxley Act.