The Effects of The Sarbanes-Oxley Act of 2002 On Audit Fees

Abstract

The Sarbanes-Oxley Act of 2002 was intended to improve corporate governanceand increase the transparency of financial audits. The legislation also could havesignificant effects on the public accounting industry. This study finds evidence ofhigher audit fees across all firms resulting from compliance with the law. However,after accounting for self-selection of auditors, we do not find evidence that thesize of the audit firm affects the magnitude of the audit fee increase.