The Regulatory Approach of James R. Doty: PCAOB Chair 2011–2018

Abstract

James R. Doty was the chair of the US Public Company Accounting Oversight Board (PCAOB) from February 2011 to January 2018. Extant research investigates the outcomes of the PCAOB's regulatory approach without examining what that approach is. This article examines two approaches to regulation: merit and disclosure. For example, the PCAOB inspection process, which focuses on remediation of deficiencies, is a form of merit regulation. A disclosure approach to regulation would focus instead on more timely disclosure of inspection findings to audit committees, investors, and other users of financial statements. The article explores the impact of Doty's regulatory approach on the direction of the PCAOB during his tenure. Under Doty, the PCAOB's approach shifted towards a more disclosure based regulatory approach and away from a merit based regulatory approach. The article is based on extensive documentary evidence as well as interviews with James Doty.