We examine the relation between the relative amount of fees paid to auditors for non-audit services and the behavior of accrual measures. We extend prior research in two important directions. First, using a pooled sample of 2,295 firms for the fiscal year 2000, we find very little evidence of a...

This paper explains the variations in incidence of accounting fraud across economic settings by putting the behavior and motivation of managers under the microscope. To safeguard their reputation in the managerial labor market, managers of firms that perform poorly are prone to fraudulently...

We document that accrual-based earnings management increased steadily from 1987 until the passage of the Sarbanes Oxley Act (SOX) in 2002, followed by a significant decline after the passage of SOX. Conversely, the level of real earnings management activities declined prior to SOX and increased...

We add to the literature on mandatory auditor rotation by examining the Florida government audit environment in which there exist both rotation and non-rotation regimes and in which there exists an independent measure of the joint quality of the audit and of the financial statements of the...

We examine Enron's collapse to provide insights as to the efficacy of recent governance reforms. In doing so, we explore two main issues. First, if recently mandated governance changes had been in place earlier, would they have constrained actions by Enron's management? Second, and more...

Internal documents released through the Enron litigation allow for a more detailed examination of the activities of top executives than is typically possible. This clinical study of Enron's Ken Lay highlights the difference between popular opinion on the role and knowledge of CEOs with that...

Since the revelation of accounting scandals at Enron, Worldcom, and several other high profile companies (quot;Enron et al.quot;) five years ago, there has been unprecedented public focus on U.S. corporate governance. A common view, articulated by many journalists, politicians, and public...

We argue that obligatory compliance with stricter financial reporting rules (e.g., the US Sarbanes-Oxley Act) may entail important unintended consequences. Paradoxically, the amount of misreporting may increase because corporate boards spend more valuable resources fulfilling statutory mandates...

The scandal that followed Enron's failure to disclose billions of dollars of debt held by off-balance sheet entities (OBSEs) prompted investor interest in these entities, and motivated auditors to request more guidance. The SEC responded by issuing Financial Release 61 (FR-61) to remind managers...

We document that accrual-based earnings management increased steadily from 1987 until the passage of the Sarbanes Oxley Act (SOX) in 2002, followed by a significant decline after the passage of SOX. Conversely, the level of real earnings management activities declined prior to SOX and increased...