We (Le Emily Xu) present evidence that in times of high client demand, audit offices find themselves resource-constrained and make resource allocation decisions that may benefit one client over another. Specifically, we examine the audit resource constraints induced by the regulations implemented by the SEC in 2003/2004 and the unintended consequences for companies not subject to the regulations: non-accelerated filers. We are responding to earlier studies calling for more research on the externalities of regulation and are expanding the knowledge base of effects of the regulations studied. Our evidence suggests that the SEC perhaps did not fully consider the unexpected costs on smaller companies and their investors, and such costs should be examined in evaluating the success of the regulations.
Unexpected Consequences: The Effects on Non-Accelerated Filers of an Accelerated Filing Deadline and Sox Section 404
Date Written: January 1, 2020
Bei Dong, University of South Florida - School of Accountancy
Stefanie L. Tate, University of Massachusetts at Lowell
Le Emily Xu, University of New Hampshire - Department of Accounting & Finance
