The Effects of Sarbanes-Oxley on the Public Accounting Industry

Abstract: The Sarbanes-Oxley Act of 2002 was intended to improve corporate governance and increase the transparency of financial audits. The legislation also could have significant effects on the public accounting industry. This study finds evidence of higher audit fees across all firms resulting from compliance with the law. However, after accounting for self-selection of auditors, we do not find evidence that the size of the audit firm affects the magnitude of the audit fee increase