The effects of a cooling-off period on perceived independence of external auditors: A study in the nonpublic regulatory environment

Carl N. Wright and Q. Booker

Research in Accounting Regulation, 2010, vol. 22, issue 1, 47-51

Abstract: Audit firms’ professionals often resign their positions to accept employment with their firms’ audit clients. To preserve the audit firms’ independence, under the Sarbanes–Oxley Act a period of dissociation is required before accepting employment with an audit client. This period of dissociation is referred to as a cooling-off period. We examine whether a cooling-off period affects state boards of accountancy members’ perceptions of audit firms’ independence in the nonpublic-company regulatory environment. Findings indicate that perceptions of audit firms’ independence increase significantly with a one-year cooling-off period. However, increasing the length of the cooling-off period from one year to two years fails to significantly increase perceptions of audit firms’ independence.

Keywords: Audit firms’ independence; Revolving-door phenomenon; Cooling-off period; Nonpublic regulatory environment (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reacre:v:22:y:2010:i:1:p:47-51

DOI: 10.1016/j.racreg.2009.11.003

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