IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v176y2022i2d10.1007_s10551-020-04733-9.html
   My bibliography  Save this article

The Influence of Political Regime on State-Level Disciplinary Actions of CPAs Sanctioned by the PCAOB

Author

Listed:
  • Abdullah Al-Moshaigeh

    (Florida Atlantic University)

  • Denise Dickins

    (East Carolina University)

  • Julia L. Higgs

    (Florida Atlantic University)

Abstract

We investigate whether enforcement is influenced by politics by comparing the severity of PCAOB sanctions of individual CPAs to the severity of related state-level disciplinary actions imposed by boards of accountancy (BOAs). Our results provide evidence that when responding to PCAOB sanctions, BOAs under Republican regimes impose less severe penalties than do BOAs under Democratic regimes. Our data and analyses inform the regulatory and enforcement practices of the accounting profession and other professions. Most directly, motivated by improvements in technology that facilitate the cross-jurisdiction practice of public accounting, states have adopted mobility laws where CPAs are only required to be licensed in their state of residence to practice in multiple states. These laws simplify licensing but may complicate enforcement. Beyond generalized red-state, blue-state differences in enforcement, we find that non-resident CPAs receive less severe disciplinary actions. If not reasonably consistent across BOAs, regulators may be unwilling to delegate responsibility for enforcement to another state’s BOA.

Suggested Citation

  • Abdullah Al-Moshaigeh & Denise Dickins & Julia L. Higgs, 2022. "The Influence of Political Regime on State-Level Disciplinary Actions of CPAs Sanctioned by the PCAOB," Journal of Business Ethics, Springer, vol. 176(2), pages 325-340, March.
    • Handle: RePEc:kap:jbuset:v:176:y:2022:i:2:d:10.1007_s10551-020-04733-9
    DOI: 10.1007/s10551-020-04733-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10551-020-04733-9
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-020-04733-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wittman, Donald, 1983. "Candidate Motivation: A Synthesis of Alternative Theories," American Political Science Review, Cambridge University Press, vol. 77(1), pages 142-157, March.
    2. Hughlene Burton & Brian Daugherty & Denise Dickins & Dan Schisler, 2016. "Dominant personality types in public accounting: selection bias or indoctrinated?," Accounting Education, Taylor & Francis Journals, vol. 25(2), pages 167-184, April.
    3. Daniella Juric & Brendan O’Connell & Michaela Rankin & Jacqueline Birt, 2018. "Determinants of the Severity of Legal and Employment Consequences for CPAs Named in SEC Accounting and Auditing Enforcement Releases," Journal of Business Ethics, Springer, vol. 147(3), pages 545-563, February.
    4. Abernathy, John L. & Barnes, Michael & Stefaniak, Chad, 2013. "A summary of 10 years of PCAOB research: What have we learned?," Journal of Accounting Literature, Elsevier, vol. 32(1), pages 30-60.
    5. Alma Cohen & Crystal S. Yang, 2019. "Judicial Politics and Sentencing Decisions," American Economic Journal: Economic Policy, American Economic Association, vol. 11(1), pages 160-191, February.
    6. Cynthia L. Krom, 2019. "Disciplinary Actions by State Professional Licensing Boards: Are They Fair?," Journal of Business Ethics, Springer, vol. 158(2), pages 567-583, August.
    7. Christopher Marquis & András Tilcsik, 2016. "Institutional Equivalence: How Industry and Community Peers Influence Corporate Philanthropy," Organization Science, INFORMS, vol. 27(5), pages 1325-1341, October.
    8. Graham, Matthew H. & Svolik, Milan W., 2020. "Democracy in America? Partisanship, Polarization, and the Robustness of Support for Democracy in the United States," American Political Science Review, Cambridge University Press, vol. 114(2), pages 392-409, May.
    9. Eric Helland, 1998. "The Enforcement Of Pollution Control Laws: Inspections, Violations, And Self-Reporting," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 141-153, February.
    10. Steven Greene, 2004. "Social Identity Theory and Party Identification," Social Science Quarterly, Southwestern Social Science Association, vol. 85(1), pages 136-153, March.
    11. John C. Coates IV, 2007. "The Goals and Promise of the Sarbanes-Oxley Act," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 91-116, Winter.
    12. Leigh, Andrew, 2008. "Estimating the impact of gubernatorial partisanship on policy settings and economic outcomes: A regression discontinuity approach," European Journal of Political Economy, Elsevier, vol. 24(1), pages 256-268, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron A. Elrod & Serkan Karadas & Katherine C. Theyson, 2019. "The effect of gubernatorial political parties on monitoring and enforcement of federal environmental regulation: evidence from the Clean Water Act," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(2), pages 171-202, April.
    2. Gerald Carlino & Thorsten Drautzburg & Robert Inman & Nicholas Zarra, 2023. "Partisanship and Fiscal Policy in Economic Unions: Evidence from US States," American Economic Review, American Economic Association, vol. 113(3), pages 701-737, March.
    3. repec:got:cegedp:144 is not listed on IDEAS
    4. Aobdia, Daniel & Shroff, Nemit, 2017. "Regulatory oversight and auditor market share," Journal of Accounting and Economics, Elsevier, vol. 63(2), pages 262-287.
    5. Calel, Raphael & Dechezlepretre, Antoine & Venmans, Frank, 2023. "Policing carbon markets," LSE Research Online Documents on Economics 120565, London School of Economics and Political Science, LSE Library.
    6. Tomer Blumkin & Volker Grossmann, 2010. "May increased partisanship lead to convergence of parties’ policy platforms?," Public Choice, Springer, vol. 145(3), pages 547-569, December.
    7. Löhlein, Lukas, 2016. "From peer review to PCAOB inspections: Regulating for audit quality in the U.S," Journal of Accounting Literature, Elsevier, vol. 36(C), pages 28-47.
    8. Löhlein, Lukas, 2016. "From peer review to PCAOB inspections: regulating for audit quality in the U.S," LSE Research Online Documents on Economics 67147, London School of Economics and Political Science, LSE Library.
    9. Prabashi Dharmasiri & Soon-Yeow Phang & Ashna Prasad & John Webster, 2022. "Consequences of Ethical and Audit Violations: Evidence from the PCAOB Settled Disciplinary Orders," Journal of Business Ethics, Springer, vol. 179(1), pages 179-203, August.
    10. Baskaran, Thushyanthan, 2012. "Ideology and fiscal policy: quasi-experimental evidence from the German States," University of Göttingen Working Papers in Economics 144, University of Goettingen, Department of Economics.
    11. Sellers, R. Drew & Fogarty, Timothy J. & Jadallah, Jadallah, 2020. "Has the new world order taught the big four to manage client portfolio risk? Examining extreme loss occurrences before and after Sarbanes Oxley," Advances in accounting, Elsevier, vol. 51(C).
    12. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    13. Valérie Revest & Alessandro Sapio, 2014. "L'Alternative Investment Market : un modèle pour le financement des petites et moyennes capitalisations ?," Revue d'économie financière, Association d'économie financière, vol. 0(2), pages 167-188.
    14. Francesco Trebbi & Miao Ben Zhang, 2022. "The Cost of Regulatory Compliance in the United States," NBER Working Papers 30691, National Bureau of Economic Research, Inc.
    15. James Christopher Westland, 2020. "Predicting credit card fraud with Sarbanes‐Oxley assessments and Fama‐French risk factors," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 27(2), pages 95-107, April.
    16. Inés Macho-Stadler, 2008. "Environmental regulation: choice of instruments under imperfect compliance," Spanish Economic Review, Springer;Spanish Economic Association, vol. 10(1), pages 1-21, March.
    17. Sylvie Héroux & Mélanie Roussy, 2020. "Three cases of compliance with governance regulation: an organizational learning perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(2), pages 449-479, June.
    18. Alan E. Wiseman, 2006. "A Theory of Partisan Support and Entry Deterrence in Electoral Competition," Journal of Theoretical Politics, , vol. 18(2), pages 123-158, April.
    19. Häckner, Jonas & Herzing, Mathias, 2017. "The effectiveness of environmental inspections in oligopolistic markets," Resource and Energy Economics, Elsevier, vol. 48(C), pages 83-97.
    20. repec:ces:ifodic:v:14:y:2016:i:1:p:19204333 is not listed on IDEAS
    21. Francisco Martínez-Mora & M. Socorro Puy, 2009. "Off-the-peak preferences over government size," Working Papers 2009-9, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    22. Akhigbe, Aigbe & Martin, Anna D. & Nishikawa, Takeshi, 2009. "Changes in risk of foreign firms listed in the U.S. following Sarbanes-Oxley," Journal of Multinational Financial Management, Elsevier, vol. 19(3), pages 193-205, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:176:y:2022:i:2:d:10.1007_s10551-020-04733-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.