Several forces have been driving the debate i.e., deregulation and financial liberalisation, systemic implications of certain failures of corporate governance and the fear of contagion, to name a few. The Sarbanes-Oxley Act, signed into law in the US in July 2002, represents a response to the series of accounting irregularities in the US.
It recognises the importance of sound information for improving the allocative efficiency of markets. The Act emphasises timely and reliable public disclosure of financial statements and changes in ownership of shares due to trading activity, independence of audit committees and obligations, strengthening of criminal penalties and addressing of conflict of interest by security analysts.