The article by Jagan Krishnan and Hyun Jong Park, and coauthored with Meng Li (University of Texas at Arlington) and Mihir Mehta (University of Michigan), examines how U.S. regulators’ enforcement actions affect auditors who are found to have engaged in misconduct. From 2003 to 2019, many culpable auditors leave their firms at significantly higher rates than non-culpable auditors. Those from Big 4 firms tend to leave the audit profession, while non-Big 4 auditors mostly remain. Regulatory penalties mainly involve suspensions limiting audit work, with fines imposed less frequently and being smaller in scale. Personal financial behavior, measured through real estate transactions, is not significantly affected. The study provides key insights into labor market and personal effects of enforcement on individual auditors.
Consequences for Culpable Auditors
