THE EFFECT OF PCAOB SANCTIONS ON ISSUER CLIENT STOCK PRICES OF NAMED CLIENTS

The Public Company Accounting Oversight Board (PCAOB) was established to oversee the audits of public companies to protect the interests of the investing public. Their responsibilities include assuring that public accounting firms' audits are conducted according to the relevant laws and professional standards. If an auditor does not follow professional standards the quality of their audits are questionable, and the investing public may not be able to rely on the financial reports of the audited firms. This study investigates the impact on stock prices of the audit clients of audit firms that receive sanction reports from the PCAOB. The results of this research indicate there is no statistically significant change in the stock price of audit clients when their audit firms receive PCAOB sanction reports.