How Has the Sarbanes-Oxley Act Affected CPA Firm Fee Productivity?

Posted: 14 Apr 2008

See all articles by Hsihui Chang

Hsihui Chang

Drexel University

Hiu Lam Choy

Drexel University

William W. Cooper

University of Texas at Austin - McCombs School of Business

Mei-Hwa Lin

affiliation not provided to SSRN

Abstract

In this paper, we estimate a production function for CPA firms to examine the effect of the Sarbanes-Oxley (SOX) Act on CPA firm fee productivity. Using annual survey data for 57 large CPA firms in the U.S. for the period from 2000 to 2005, we find that the fee productivity of CPA firms in transforming human resources into service revenues increases in the post-Act period. Consistent with our expectations and with the first year deadline for compliance of Section 404 of SOX, this increase in the fee productivity of CPA firms was particularly strong in 2004. The current evidence seems to suggest that SOX is value-enhancing for CPA firms.

Keywords: Sarbanes-Oxley Act, CPA firms, Fee productivity

JEL Classification: D24, L11

Suggested Citation

Chang, Hsihui and Choy, Hiu Lam and Cooper, William W. and Lin, Mei-Hwa, How Has the Sarbanes-Oxley Act Affected CPA Firm Fee Productivity?. Available at SSRN: https://ssrn.com/abstract=1120406

Hsihui Chang (Contact Author)

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Hiu Lam Choy

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

William W. Cooper

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

Mei-Hwa Lin

affiliation not provided to SSRN

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