The Sarbanes-Oxley Act of 2002 (SOX) was created, in part, to address cases of companies making fraudulent entries to avoid reporting net losses. Evidence of this kind of earnings management before and after the implementation of SOX is presented in the Tableau visualization below, which allows you to mouse-over the graphs to reveal specific amounts for use in answering the following questions. Earnings Intervals Pre-SOX (1985-2001) 3500 3000 2500 Frequency 2000 Frequency 1500 1000 500 0 Earnings Intervals Post-SOX (2003-2017) 3500 3000 2500 -0.2 2000 1500 1000 500 0 -0.1 -0.0 0.1 Net Income [relative to market value of Stockholders' Equity] -0.2 -0.1 0.2 -0.0 0.1 Net Income [relative to market value of Stockholders' Equity] 0.2 0.3 0.3 The two histograms show the total number of companies reporting earnings below and above zero for the years 1985-2001 and 2003- 2017. (To account for differences in company size, earnings intervals are calculated by dividing net income by the market value of stockholders' equity. Excluded are companies in finance and other regulated industries, as well as companies reporting exactly zero net income.) Required: 1. How many companies reported a slight net loss (indicated by the red bar) in the pre-SOX period? How many companies reported a slight net income (indicated by the green bar) in the pre-SOX period shown? Was a slight net loss or slight net income more common in the pre-SOX period shown? 2. How many companies reported a slight net loss (indicated by the red bar) in the post-SOX period? How many companies reported a slight net income (indicated by the green bar) in the post-SOX period? Was a slight net loss or slight net income more common in the post-SOX period? 3. Select the statements that are consistent with the patterns in the pre- and post-SOX periods. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How many companies reported a slight net loss (indicated by the red bar) in the pre-SOX period? How many companies reported a slight net income (indicated by the green bar) in the pre-SOX period shown? Was a slight net loss or slight net income more common in the pre-SOX period shown? Number of companies reported net loss Number of companies reported net income A was more common in the pre-SOX period shown. Required 2 > < Required 1