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Exploring Sarbanes-Oxley's effect on attitudes, perceptions of norms, and intentions to commit financial statement fraud from a general deterrence perspective

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  • Ugrin, Joseph C.
  • Odom, Marcus D.

Abstract

This paper uses an experiment to examine how deterrence mechanisms within the Sarbanes-Oxley Act's (SOX) Sections 404 and 906 influence the fraudulent financial reporting behavior of individuals. The results indicate that the threat of potential jail time can be an effective mechanism for reducing financial statement fraud, but its effectiveness is limited and influenced by a wide range of social, environmental, and demographic factors. The findings show that the incremental increase in potential jail time imposed by SOX creates little deterrence beyond mechanisms that were in place pre-SOX. The findings also reveal that the effect of jail time is primarily a function of economic consequences, such as lost career opportunities that are created from serving just a minimal amount of time in jail. The results should be of interest to regulators and practitioners wanting to understand how SOX-based deterrence mechanisms can influence individual behavior. The results contribute to the general deterrence theory literature by showing how the effect of deterrence mechanisms on illicit behavior can be influenced by social, environmental, and demographic factors.

Suggested Citation

  • Ugrin, Joseph C. & Odom, Marcus D., 2010. "Exploring Sarbanes-Oxley's effect on attitudes, perceptions of norms, and intentions to commit financial statement fraud from a general deterrence perspective," Journal of Accounting and Public Policy, Elsevier, vol. 29(5), pages 439-458, September.
    • Handle: RePEc:eee:jappol:v:29:y::i:5:p:439-458
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    Citations

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    Cited by:

    1. Maria BAXEVANI & George MYLONAS, 2014. "Accounting Fraud And Characteristics Of Company Executives: An Empirical Investigation," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 13(2), pages 31-42.
    2. Monica Ramos Montesdeoca & Agustín J. Sánchez Medina & Felix Blázquez Santana, 2019. "Research Topics in Accounting Fraud in the 21st Century: A State of the Art," Sustainability, MDPI, vol. 11(6), pages 1-31, March.
    3. Maciej A. Górecki & Natalia Letki, 2021. "Social Norms Moderate the Effect of Tax System on Tax Evasion: Evidence from a Large-Scale Survey Experiment," Journal of Business Ethics, Springer, vol. 172(4), pages 727-746, September.
    4. Mark E. Lokanan & Prerna Sharma, 2023. "Two Decades of Accounting Fraud Research: The Missing Meso-Level Analysis," SAGE Open, , vol. 13(3), pages 21582440231, September.
    5. Devan Mescall & Fred Phillips & Regan N. Schmidt, 2017. "Does the Accounting Profession Discipline Its Members Differently After Public Scrutiny?," Journal of Business Ethics, Springer, vol. 142(2), pages 285-309, May.
    6. Yanqun Yang & Linwei Wang & Said M. Easa & Xinyi Zheng, 2022. "Analysis of Electric Bicycle Riders’ Use of Mobile Phones While Riding on Campus," IJERPH, MDPI, vol. 19(10), pages 1-15, May.
    7. Libby, Robert & Rennekamp, Kristina M. & Seybert, Nicholas, 2015. "Regulation and the interdependent roles of managers, auditors, and directors in earnings management and accounting choice," Accounting, Organizations and Society, Elsevier, vol. 47(C), pages 25-42.
    8. Abdullah Albizri & Deniz Appelbaum & Nicholas Rizzotto, 2019. "Evaluation of financial statements fraud detection research: a multi-disciplinary analysis," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 16(4), pages 206-241, December.

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