The impact of regulation on economic bonding and auditor independence: An analysis of sox and suggestions for future research

Abstract

The results of recent research suggest that certain provisions of the Sarbanes–Oxley Act of 2002 (SOX) may have been less successful than intended (e.g., Abbott, Parker, & Peters, 2009). Based on two different descriptions of economic bonding between auditors and their clients, we propose an explanation of why this might be so by showing that the effect of SOX mandates, and regulation in general, aimed at enhancing auditor independence is dependent on whether shareholders or managers monitor the auditor. The results of prior empirical studies are examined in context of the framework we describe, and suggestions for future research on this important topic are outlined.

Citation

Dickins, D. and Skantz, T. (2010), "The impact of regulation on economic bonding and auditor independence: An analysis of sox and suggestions for future research", Lehman, C.R. (Ed.) Ethics, Equity, and Regulation (Advances in Public Interest Accounting, Vol. 15), Emerald Group Publishing Limited, Leeds, pp. 1-21. https://doi.org/10.1108/S1041-7060(2010)0000015004