Two alternative approaches are used in audit practice to make quantitative materiality assessments about proposed audit adjustments: the cumulative approach compares to net income the total amount of misstatement existing at the end of the current period, while the current-period approach...

We investigate consequences of tax-related material weaknesses in firms’ internal controls over financial reporting. We hypothesize that the presence of internal control material weaknesses (i.e., ICMWs) over the tax function makes earnings management through the income tax accrual (Dhaliwal...

Offshoring of accounting processes has become a common business practice, pursued by firms to reduce costs and focus on core competencies. However, our understanding about internal controls of these offshored processes is limited. Grounded in theory that is supported by prior literature and...

This paper reports the results of a series of case studies conducted to explore the impact of the Sarbanes-Oxley Act of 2002 on the performance of small and medium-sized enterprises (SMEs). This issue is critical as the SEC and the PCAOB continue to defend the requirement that SMEs adhere to the...

This paper reports the results of a series of case studies conducted to explore the impact of the Sarbanes-Oxley Act of 2002 on the performance of small and medium-sized enterprises (SMEs). This issue is critical as the SEC and the PCAOB continue to defend the requirement that SMEs adhere to the...

We examine whether passage of the Sarbanes-Oxley Act (SOX) in 2002 did in fact have the intended effect of reducing agency conflicts or did it alter managerial incentives in ways that could be detrimental to firm value. Our findings for the full sample suggest a decrease in firm value and the...

Following SOX, exchanges mandated majority independent boards and defined independence such that some directors could reclassify from non-independent to independent. Because membership is unchanged, reclassifications make a board more independent legally, but not economically. I exploit the...

One of the main goals of the Sarbanes Oxley Act of 2002 (SOX) is to ensure a greater flow of timely and accurate accounting information to investors. While there has been a lot of criticism of SOX, mostly with regard to compliance costs, very little light has been shed on the impact of SOX on...

Foreign firms terminate their SEC registration in the aftermath of the Sarbanes-Oxley Act (SOX) because they no longer require outside funds to finance growth opportunities. Deregistering firms' insiders benefit from greater discretion to consume private benefits without having to raise higher...