Consequences for Culpable Auditors

Jagan Krishnan, Meng Li, Mihir N. Mehta and Hyun Jong Park

Journal of Accounting Research, 2025, vol. 63, issue 4, 1493-1546

Abstract: We present the first comprehensive descriptive evidence on the labor market and personal consequences for audit professionals in the United States who are named in SEC or PCAOB enforcement actions. Three key findings emerge. First, between 38% and 73% of culpable auditors depart from their firms within one year after the enforcement event. These departure rates are three to four times higher compared with a sample of non‐culpable auditors. Second, 83% of culpable auditors departing from Big 4 accounting firms exit the profession, compared with 58% of a departing non‐culpable comparison group. In contrast, about 77% of the culpable auditors leaving non–Big 4 accounting firms remain in public accounting, compared with 51% of a departing non‐culpable comparison group. Third, using novel data on personal real estate holdings, we find that culpable auditors do not appear to engage in markedly different transactions around enforcement compared with a comparison sample of non‐culpable individuals.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/1475-679X.12608

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:63:y:2025:i:4:p:1493-1546

Ordering information: This journal article can be ordered from
https://onlinelibrary.wiley.com/journal/1475679x

Access Statistics for this article

Journal of Accounting Research is currently edited by Philip G. Berger, Anna Costello, Luzi Hail, Valeri Nikolaev, Haresh Sapra, Laurence van Lent and Regina Wittenberg Moerman

More articles in Journal of Accounting Research from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().