Document Type
Article
Publication Date
5-1-2005
Abstract
Institutional theory is explored as a way of explaining Section 404 first year experiences as the constituents set about to socially construct the law that regulates them. The normative pressure from the professional network of consultants emerges as most influential. By examining the Section 404 process in this fashion, it focuses attention as to whether the external auditors, taking turns as consultants at their competitors' external audit clients, drove the Section 404 compliance process and in a manner that resulted in perceived protection for them but with less than optimal benefit for their clients. Perhaps this study's results open up the possibility to interpretation that the reduction in second year Section 404 compliance costs represents a re-balancing of the cost benefit equation, and costs are being reduced, because of the recognition that the present process may not produce enough substantive benefits. The risk therefore is that the Section 404 compliance effort may become, over time, the low cost commodity product that some characterized as the downfall of the external audit process. None of the stakeholders, be it the regulators, external audit profession, or management can really afford that development.
Keywords
institutional econonomics, Sarbanes-Oxley, Section 404, institutional theory, regulators, consultants, external auditors
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Clune, Richard R., "An Institutional Theory Perspective: Corporate Responses to Section 404 of the Sarbanes-Oxley Act of 2002" (2005). Student Scholarship. 77.
https://commons.case.edu/studentworks/77
