Does the Government Sector Need Legislation Similar to the Sarbanes-Oxley Act of 2002?

40 Pages Posted: 8 Jan 2010

See all articles by Alan Reinstein

Alan Reinstein

Wayne State University

Mohammad J. Abdolmohammadi

Bentley University - Department of Accountancy

Cathleen L. Miller

affiliation not provided to SSRN

Date Written: January 6, 2010

Abstract

The Sarbanes-Oxley Act (SOA) of 2002 has been credited with having substantial benefits regarding enhanced credibility of corporate financial reporting. Moore et al. (2006) argue that due to the auditors’ “moral seduction” and corporate “strategic issue cycling” (lobbying), SOA must be strengthened through additional legislation. We use Moore et al.’s (2006) moral-seduction and issue-cycle theories to hypothesize the importance of SOA-like legislation for the state and local government sector. We then use survey data from governmental accounting officials and their auditors to test our hypotheses. Using univariate and multivariate analyses, we find that, subjects are close to neutral on whether SOA-like legislation should be enacted for governmental practice. Further analysis indicates that subjects with higher degree of familiarity with the SOA, those who work more than 40 hours a week, and those with higher experience in government practice (both in years of practice and in percentage of work being related to government accounting) are less likely to support SOA-like legislation for governmental entities. Our results may help policy makers understand the environment currently faced by the government sector and aid in formulating evidence for effective legislation for this industry.

Keywords: Municipalities, Sarbanes-Oxley Act of 2002, Corporate Governance

Suggested Citation

Reinstein, Alan and Abdolmohammadi, Mohammad J. and Miller, Cathleen L., Does the Government Sector Need Legislation Similar to the Sarbanes-Oxley Act of 2002? (January 6, 2010). Available at SSRN: https://ssrn.com/abstract=1532781 or http://dx.doi.org/10.2139/ssrn.1532781

Alan Reinstein

Wayne State University ( email )

School of Business
Detroit, MI 48202
United States
248-357-2400 (Phone)
313-577-4530 (Fax)

Mohammad J. Abdolmohammadi (Contact Author)

Bentley University - Department of Accountancy ( email )

175 Forest Street
279 Adamian Academic Center
Waltham, MA 02452
United States
781-891-2976 (Phone)

Cathleen L. Miller

affiliation not provided to SSRN ( email )

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