Corporate ComplianceThe corporate governance system in the United States must seem to be in a sorry state. Top executive compensation is also regularly criticized as excessive by the press, academics and even top Federal Reserve officials. These failures and concerns in turn served as catalysts for legislative changes – in the form of the Sarbanes-Oxley Act of 2002 (SOX) – and regulatory changes, including new NYSE governance guidelines and of NASDAQ. The influence of the capital market was also evident in the way companies reorganized. For example, there has been a general trend towards decentralization. Large companies have worked hard to become more agile and find ways to offer their employees more powerful incentives. At the same time, external capital markets played a greater role in the reallocation of capital, as evidenced by the significant volume of mergers and divestitures throughout the 1990s. Corporate governance structures in place before The 1980s gave little reason for the leaders of America's large public companies to make shareholder interests their priority. Since the mid-1980s, the American style of corporate governance has reinvented itself and the rest of the world seems to be following the American example. Technological advancements, increasing numbers of business bankruptcies, and widely publicized corporate scandals that shook the nation's confidence have forced businesses to place greater emphasis on internal control systems and audits. . Section 404 of the Sarbanes Oxley Act requires public companies to include a report on the effectiveness of controls in their annual Form 10-k..