Associations between SOX 404 opinions and auditors, audit committees, and executives

This dissertation examined three issues associated with Section 404 of the Sarbanes-Oxley Act (SOX) that are of current interest to regulators and the accounting profession. For the first essay, I examined auditor changes from 2003 to 2005 for 2,454 non-financial firms that filed their initial SOX 404 opinions prior to July 1, 2005. My results showed that there is a significant association between the receipt of an adverse SOX 404 opinion and auditor resignations - both before and after the issuance of the SOX 404 opinion. The data related to auditor dismissals show that clients are not successful in opinion shopping, since clients dismissing the auditor before the SOX 404 report also are more likely to receive an adverse SOX 404 opinion than clients not changing auditors. My second essay examined the relation between audit committee characteristics and changes in material weaknesses in internal control over financial reporting under the new SOX regime. My results showed that improvements in internal control in the second year of SOX are associated with: (1) the number of audit committee members and (2) financial expertise of audit committee members. My third essay examined the relation between the appointment of the new executives and the subsequent receipt of initial section 404 of SOX opinions. My results showed that adverse SOX 404 reports will be more likely at firms that recently hired a new chief financial officer (CFO).

A spatial-temporal analysis of section 404 wetland permitting in Texas and Florida: Thirteen years of impact along the coast

Over the past 200 years, an estimated 53% (about 47 million ha) of the original wetlands in the conterminous United States have been lost, mainly as a result of various human activities. Despite the importance of wetlands (particularly along the coast), and a longstanding federal policy framework meant to protect their integrity, the cumulative impact on these natural systems over large areas is poorly understood. We address this lack of research by mapping and conducting descriptive spatial analyses of federal wetland alteration permits (pursuant to section 404 of the Clean Water Act) across 85 watersheds in Florida and coastal Texas from 1991 to 2003. Results show that more than half of the permits issued in both states (60%) fell under the Nationwide permitting category. Permits issued in Texas were typically located outside of urban areas (78%) and outside 100-year floodplains (61%). More than half of permits issued in Florida were within urban areas (57%) and outside of 100-year floodplains (51%). The most affected wetlands types were estuarine in Texas (47%) and palustrine in Florida (55%). We expect that an additional outcome of this work will be an increased awareness of the cumulative depletion of wetlands and loss of ecological services in these urbanized areas, perhaps leading to increased conservation efforts.