Abstract

Sarbanes-Oxley Act, which aims at reforming and bettering the managers’ trusteeship, gives a great influence on the corporate governance and internal controls of more than thirty listed companies in America. This text applies the client-agent theory to analyze the significance of economics of the Act and shows that the essence of the Act is to reduce the cost of the incentive contract between the investors and the personnel owners and the measurement cost in implementation by strengthening internal control and emphasizing the managers’ trusteeship. The purpose of it is to achieve the accuracy and reliability of the corporate information disclosure so as to protect the investors and others objectives. It is of great significance for reference for Chinese businesses to better the corporate governance and deep reform.

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