The changing face of the US SEC’s enforcement investigations (AAERs) into financial statement fraud in the post-enron environment

Lane, Richard, and O'Connell, Brendan (2007) The changing face of the US SEC’s enforcement investigations (AAERs) into financial statement fraud in the post-enron environment. In: Proceedings of the Fifth Asia Pacific Interdisciplinary Research in Accounting Conference. From: APIRA 2007 Fifth Asia Pacific Interdisciplinary Research in Accounting Conference , 8-10 July 2007, Auckland, New Zealand.

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Abstract

This study examines the U.S. SEC’s investigations into financial statement fraud through an analysis of Accounting and Auditing Enforcement Releases (AAERs) from 2002 to 2005. Our study seeks to correct perceived deficiencies (Briloff, 2001; O’Connell, 2001) in the sampling process employed in the COSO Report (1999) which examined AAERs from 1987 to 1997. This paper is also motivated by the need to examine the changing environment, post-Enron, toward regulation of accounting fraud. Using an institutional theory framework it was hypothesized that the post-Enron environment may have brought about changes in the activities of the SEC in an effort for this agency to legitimize itself before major stakeholders. Our study finds evidence of changes in SEC enforcement activities since the COSO Report (1999). Specifically, we find that enforcement activities have increased substantially post-Enron and the companies subject to AAERs were, on average, much larger, more profitable and the frauds more substantial than those exhibited in the COSO Report (1999). These findings suggest that the SEC has become more aggressive at pursuing larger companies for financial statement fraud in the post-Enron environment.

Item ID: 3185
Item Type: Conference Item (Research - E1)
Keywords: institutional theory; financial statement fraud; SEC; Accounting & Auditing Enforcement Releases
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Date Deposited: 26 Nov 2009 01:39
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150103 Financial Accounting @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910402 Management @ 100%
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