TY  - JOUR
AB  - Purpose– The purpose of this paper is two‐fold: first, to examine whether the quality of accruals, as measured by accrual persistence, improved in the post‐Sarbanes‐Oxley (SOX) period, and second, to examine the degree to which SOX‐related improvement in accrual persistence varies across companies depending on the degree of their auditor's independence.Design/methodology/approach– The paper compares accrual persistence in the pre‐ and post‐SOX periods to test the first question. Then, partitioning on relative client importance as a measure of auditor independence, the paper compares the SOX‐based improvement for clients of low and high independence audit firms.Findings– The study first demonstrates that accrual persistence increased significantly in the post‐SOX period. The study also finds evidence that in the post‐SOX period, the subsample of companies audited by Big‐N auditors with lower‐independence experienced the greatest improvement in accrual persistence.Originality/value– This is the first paper to evaluate SOX‐related improvements in the quality of earnings as measured by accrual persistence. Prior studies test abnormal accruals and other earnings management metrics, however, persistence is a more general test of financial statement quality. This study also is the first to compare SOX‐related improvements for clients of firms with differing levels of independence.
VL  - 26
IS  - 5
SN  - 0268-6902
DO  - 10.1108/02686901111129580
UR  - https://doi.org/10.1108/02686901111129580
AU  - Chambers Dennis
AU  - Payne Jeff
PY  - 2011
Y1  - 2011/01/01
TI  - Audit quality and accrual persistence: evidence from the pre‐ and post‐Sarbanes‐Oxley periods
T2  - Managerial Auditing Journal
PB  - Emerald Group Publishing Limited
SP  - 437
EP  - 456
Y2  - 2024/04/25
ER  -