Seminar (Dept. of Accounting)

Theme：The SEC Enforcement Actions against Auditors

Speaker：Zhifeng Yang Associate professor, Stony Brook University SUNY

Time：2021-12-22 10:30

Address：Zoom Meeting

Language：Chinese/English

ABSTRACT:

In this study, we measure auditors’ political connections based on their political contributions during elections and lobbying expenditures. We find that having political connections lowers the likelihood of auditors being prosecuted by the Securities Exchange Commission (SEC) and reduces the penalty if auditors are prosecuted. The effect of political connections on the SEC’s enforcement actions is stronger when an auditor’s connected politicians sit on congress committees that oversee the SEC or when an auditor employs lobbyists affiliated with the SEC. Political connections do not reduce the likelihood of an auditor being sued by private plaintiffs. The different effects of political connections on the SEC’s enforcement actions and private litigation suggest that our analysis of political connections captures auditors’ political influence on the SEC and not audit quality. The effect of political connections on SEC enforcement is significant in both Big N and non-Big N subsamples, using an instrumental variable approach, and using settings in which auditors experience exogenous losses in political connections.

SHORT BIOGRAPHY:

Zhifeng Yang, Ph.D., CFA, earned his Ph.D. from University of Alberta. His teaching interests cover corporate governance, financial accounting, and financial statement analysis. The foci of Dr. Yang’s research have been on corporate governance, finance, and auditing issues in emerging markets. Dr. Yang has published in Journal of Accounting Research, Journal of Accounting and Economics, The Accounting Review, and Contemporary Accounting Research.