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

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  • Wright, Carl N.
  • Booker, Q.

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.

Suggested Citation

  • Wright, Carl N. & Booker, Q., 2010. "The effects of a cooling-off period on perceived independence of external auditors: A study in the nonpublic regulatory environment," Research in Accounting Regulation, Elsevier, vol. 22(1), pages 47-51.
    • Handle: RePEc:eee:reacre:v:22:y:2010:i:1:p:47-51
    DOI: 10.1016/j.racreg.2009.11.003
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    Cited by:

    1. Thompson, Dave & Booker, Quinton, 2015. "Bank loan officers' perceptions concerning independence, objectivity, and reliability when external auditors also perform tax compliance activities for nonpublic clients," Research in Accounting Regulation, Elsevier, vol. 27(1), pages 14-20.

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