"Sarbanes-Oxley Act" And Its Enlightenment To China's Listed Companies' Governance

After Enron scandal, the U.S. Congress developed and promulgated the "Sarbanes-Oxley Act", or "Public Company Accounting Reform and Investor Protection Act". The main contents concerning the governance of the listed company of the Act can be divided into three parts: one is on improving the corporate governance structure; second is to strengthen the internal control mechanism, and the third is reconstructing the framework of accounting regulation.The three problems which "Sarbanes-Oxley Act," was trying to resolve is also the main problems that the Chinese listed companies are facing. The problem of governance structure of listed companies in China includes unreasonable ownership structure and internal control issues, as well as executives facing high risk of moral hazard issues. As for the internal controls in the governance of listed company, although China has issued the "Internal Control Guidelines for listed Companies in Shanghai Stock Exchange", " Internal Control Guidelines for listed Companies in Shenzhen Exchange " and "Basic Norms of Internal Control" and other relevant regulations of internal control of listed companies, but because of its lack of implementation details and the disciplinary mechanism, China's internal control mechanisms of the listed companies are still weak, and internal control culture is not really formed. As concerning the accounting regulation of the listed company, there are problems in legal regulation, government supervision, audit and supervision of Certified Public Accountants, the internal accounting supervision, and the theoretical circle and the mass media monitoring.Of these problems, we expect to introduce the relevant contents of "Sarbanes-Oxley Act" combining with China's actual situation of the listed companies, put forward some management recommendations. These include: first, through the improvement of the Audit Committee and independent director system, as well as monitoring executives of listed companies to improve the oversight mechanisms for the governance structure of listed companies in China. Second, through recommending the relevant contents of "Sarbanes-Oxley Act" in internal control system, we try to give advice to strengthen the internal control system in China's listed companies. Third, by strengthening the independence of Certified Public Accountants, the disclosure of accounting information, supervision and the establishment of mutual checks and balances system of government supervision of listed companies in China to improve the accounting control system.