The Value of 'Cooling Off'

4 Pages Posted: 27 Oct 2008

See all articles by Brian Daugherty

Brian Daugherty

University of Wisconsin - Milwaukee

Denise Dickins

East Carolina University

Date Written: October, 24 2008


The Sarbanes-Oxley Act of 2002 mandated that an auditing firm's independence is impaired if a former member of a public company's audit engagement team accepts a supervisory accounting position or financial reporting oversight role with the audit client, unless that individual observes a one-year cooling off period. Drawing on recent empirical research, we question whether investors prefer this one size fits all cooling off mandate, or whether a company-specific disclosure alternative would have equal or greater value relevance.

Keywords: Sarbanes-Oxley Act, corporate governance, stakeholders, auditing, labor market, audit team, cooling off, hiring, accouting, regulation, finance

JEL Classification: G12, G34, G38, J44, M41, M45, M49

Suggested Citation

Daugherty, Brian and Dickins, Denise, The Value of 'Cooling Off' (October, 24 2008). Regulation, Vol. 31, No. 3, Fall 2008. Available at SSRN:

Brian Daugherty (Contact Author)

University of Wisconsin - Milwaukee ( email )

Sheldon B. Lubar School of Business
P.O. Box 742
Milwaukee, WI 53201-0742
United States
414-229-5737 (Phone)
414-229-5999 (Fax)


Denise Dickins

East Carolina University ( email )

United States

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