In the recent past, high profile cases due to fraudulent accounting and tax evasion have led to substantial changes in the regulations of corporate governance and accounting (Crocker & Slemrod, 2005). Fraudulent accounting and tax evasion has been established as an avenue through which corporations can increase their profits and as such requires increased regulation (Crocker & Slemrod, 2005). In this regard the Sarbanes Oxley bill passed in 2002 set up a regulatory board charged with oversight of the accounting industry. Based on new regulations there are harsher penalties for corporations or officers found to have colluded in the evasion of taxes (Crocker & Slemrod, 2005). The evasion of taxes is a more serious issue in some economies than in others. It is reported that with moderate government regulation the rate of tax evasion is reduced and an increased compliance is observed coupled with greater economic growth (Chen, 2003). However, the enforcement of law in international corporations is difficult given varying legal requirements. This problem could be overcome through listing of foreign companies in the U.S. stock trading market with a view to deterring officials from engaging in embezzlement and tax evasion (Siegel, 2005). This can be performed through an American Depository Receipt or direct listing on a major American stock exchange. This procedure has been found effective by international companies seeking to force compliance and deter corrupt officials (Siegel, 2005). In addition to the above practices insider trading is a practice that has drawn concern among regulators and participants in the financial industry. It is not permitted for banks to use private knowledge based on information such as credit default swaps (CDS) to trade. However, reports suggest that many institutions have been doing this to reduce risks to their own balance sheets (Acharya & Johnson, 2007). Studies have indicated that there is a flow of information from CDS markets to equity markets most often emanating from sources within the financial organizations (Randazzo et al., 2005).Following such actions the committee that developed the Sarbanes Oxley bill made provisions to allow for prosecution of individuals within the organization as well as provisions that could protect whistle blowers (Wallison, 2005). Brief Historical Context of Sarbanes Oxley Act The bill passed in 2002 and implemented by the Securities and Exchange Commission (SEC) came into being following the financial scandals that led to the collapse of Enron, WorldCom and several other major companies (Wallison, 2005). The main component of the act is that it places responsibility on the shoulders individuals and systems to prevent fraud before it happens. The directors, auditors and accountants must comply with more stringent internal controls in an attempt to end unfair trading practices within organizations thus reducing risks to shareholders investment (Wallison, 2005). The implementation of the act has been useful in addressing some ethical issues that before were not appropriately catered for thus creating loopholes. Following the huge losses that were made in the scandals involving Enron, WorldCom and the like it became app