Sarbanes Oxley Section 404 Costs of Compliance: a case study

Sneller, Lineke; Langendijk, Henk P.A.J.

doi:10.1111/j.1467-8683.2007.00547.x

Cited by 19 publications

(9 citation statements)

References 4 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…More recently, the importance of reliance on IA function by external auditors has been highlighted by the PCAOB (AS No. 5 2007; see also Gramling et al 2004, andSneller andLangendijk 2007). Gramling et al (2004, p.197) dium-high level of support) to be achieved from the external audit evidence.…”

Section: Practice Implicationsmentioning

confidence: 95%

An Analytical Model for External Auditor Evaluation of the Internal Audit Function Using Belief Functions

Desai

Srivastava

2006

SSRN Journal

View full text Add to dashboard Cite

Section: Practice Implicationsmentioning

confidence: 95%

An Analytical Model for External Auditor Evaluation of the Internal Audit Function Using Belief Functions

Desai

Srivastava

2006

SSRN Journal

View full text Add to dashboard Cite

“…We furthermore control for the following board characteristics: outside directors, audit committees, 4 and board size, all of which are expected to be positively related to audit fees, despite the mixed results in the literature (Abbott et al, 2003;Carcello et al, 2002;Chahine & Filatotchev, 2011;Hay, 2011;Knechel & Willekens, 2006;Peel & Clatworthy, 2001;Zaman et al, 2011). Finally, we include an indicator for whether the company is required to report on internal controls under the Sarbanes-Oxley Act (SOX) because this is likely to result in higher audit fees (Sneller & Langendijk, 2007). Only a few Danish companies (all non-financial) are listed on the US exchange.…”

Section: Variablesmentioning

confidence: 99%

The Impact of Board Interlocks on Auditor Choice and Audit Fees

Johansen¹,

Pettersson²

2013

Corporate Governance

View full text Add to dashboard Cite

Manuscript Type Empirical Research Question/Issue This paper uses unique Danish data to examine whether non‐executive directors draw on both direct and indirect ties in the network of interlocking directorates to impact auditor choice, and whether this impact has consequences for audit fees. Research Findings/Insight The paper finds clear evidence that non‐executive directors draw on their networks to impact auditor choice, and evidence that clients pay an audit fee premium when non‐executive directors are connected to audit firms outside the focal company. The relationship between non‐executive directors and auditors is well established in Denmark and exhibits features that currently emerge in international debates and regulations. Therefore, the national context offers an interesting setting for empirical evidence of whether international aspirations are likely to be realized. Theoretical/Academic Implications Audit‐related corporate governance research has predominantly adopted the agency theory paradigm and has only drawn on alternative theoretical perspectives to a limited extent. We draw on the literature about board interlocks and social network theory in order to develop a study that aims to increase our understanding of the non‐executive director–auditor relationship and the role that board networks have in governing auditor choice decisions. The study identifies interlocks as an infrastructure for differentiation in the audit market and determines that such differentiation is associated with an audit fee premium for audit firms. The findings indicate that personal experiences with auditors are shared among non‐executive directors and that audit attributes other than low cost audit, auditor size, and industry specialism, are important in the audit market. Practitioner/Policy Implications Our findings support continued efforts to strengthen the relationship between non‐executive directors and auditors. Our findings also indicate that board interlocks may constitute a mechanism that mitigates the audit market failure that arises because of a lack of auditor differentiation.

show abstract

“…Further, our results bring new evidence of a specific benefit of SOX, as we are exploring the gains of firms in the terms of credit. Much research has been carried out regarding the net effects of SOX (e.g., Engel, Hayes, & Wang, 2007;Kamar, Karaca-Mandic, & Talley, 2005;Leuz, Triantis, & Wang, 2008;Piotroski & Srinivasan, 2008;Sneller & Langendijk, 2007;among others).…”

Section: Introductionmentioning

confidence: 99%

Corporate Governance and Credit Access in Brazil: The Sarbanes‐Oxley Act as a Natural Experiment

Funchal

Monte-mor

2016

Corporate Governance

View full text Add to dashboard Cite

Manuscript Type Empirical Research Question/Issue This study seeks to examine the effect of changes in corporate governance levels on the choice of firms' debt financing in a relevant emerging economy, taking advantage of the Sarbanes‐Oxley Act as a natural experiment. Research Findings/Insights Our empirical method uses an experimental design in which we control for observed and unobserved firm heterogeneity via a difference‐in‐differences estimator. We show that firms subjected to this new regulation, which raised governance requirements, observed a positive effect on their access to the credit market, increasing their total debt significantly, via long‐term and private debt, and reducing the cost of debt, indicating that SOX produced economic gains in this aspect. Theoretical/Academic Implications The main contribution of the present paper is to measure the corporate governance effects on firms' debt financing policies, isolated from other contemporaneous events. Furthermore, we develop a simple theoretical model to help in the understanding of the main sources of SOX's effects. Finally, the natural experimental approach deals with the endogenous relation between corporate governance and firms' choices on debt financing, and presents an alternative to instrumental variables techniques. Practitioner/Policy Implications This paper offers insights to policymakers of emerging economies interested in the development of the credit market. Using laws and regulations like the Sarbanes‐Oxley Act, we show that it is possible to improve firms' governance, with a positive impact on firms' ability to access credit.

show abstract

Sarbanes Oxley Section 404 Costs of Compliance: a case study

Cited by 19 publications

References 4 publications

An Analytical Model for External Auditor Evaluation of the Internal Audit Function Using Belief Functions

An Analytical Model for External Auditor Evaluation of the Internal Audit Function Using Belief Functions

The Impact of Board Interlocks on Auditor Choice and Audit Fees

Corporate Governance and Credit Access in Brazil: The Sarbanes‐Oxley Act as a Natural Experiment

Contact Info

Product

Resources

About