Auditor Independence Revisited: The Effects of SOX on Auditor Independence
Suggestions for Academic Research, International Journal of Disclosure and Governance, Vol. 5(2): 112-125, 2008
Posted: 28 Nov 2013
Date Written: 2008
Much has been written about Section 404 of the Sarbanes Oxley Act, especially the great expense that it inflicts upon SEC registrants preparing their annual reports. Less remarked on, though, is whether the restrictions that SOX imposes on the auditing profession in its relationship to its clients has significantly improved auditor independence. This question can only be answered by researchers. We seek to shed some light on this by examining what researchers learned about the impact of Sarbanes Oxley on auditor independence since SOX’s passage. We also examine if researchers have studied the key ramifications of the requirements of SOX. We address the deficiencies of extant published literature and discuss what areas need to be looked at. Finally, we discuss potential alternative audit market structures developed overseas and briefly discuss their relevance here. In essence, we examine whether there is a gap between what regulators want to see addressed and what researchers have actually looked at with respect to issues concerning auditor independence in the post-Sarbanes Oxley period.
Keywords: Sarbanes Oxley Act, auditor independence, corporate governance, audit market
JEL Classification: M42, M48, M49
Suggested Citation: Suggested Citation