The Dodd–Frank Act of 2010 exempts small, non-accelerated filers from compliance with Sarbanes–Oxley Act (SOX) Section 404b internal control audits. However, these firms are required to comply with other internal control regulations, namely, SOX Sections 302 and 404a, starting in 2002 and 2007, respectively. A small number of these firms also voluntarily adopted (and sometimes dropped) Section 404b during 2004-2010. The purpose of this study is to investigate the impact of a series of internal control regulations introduced by SOX on the financial reporting quality of small firms.,The research design for this study is empirical. Using unsigned and signed discretionary accruals as measures of financial reporting quality, the authors compare the financial reporting quality for adopters and non-adopters across four regulation regimes over the period 2000-2010: PRESOX, SOX 302, SOX 404a and SOX 404b.,The results indicate that most of the adopters and non-adopters benefited from SOX 302 and 404a compared with the PRESOX period. However, only the non-adopters gained incrementally when moving from SOX 302 to SOX 404a. Also, Section 404b benefited firms with material weaknesses, as well as firms without material weaknesses that had the lowest reporting quality, in the PRESOX period.,This study helps inform the important policy debate on whether to increase the threshold that is used for the SOX 404b exemption. It shows incremental benefits for firms that adopted Section 404b audits, even when they were complying with Section 302 and Section 404a. Consequently, extending the exemption to more companies would result in a loss of the reporting quality benefit of 404b.,This study contributes to the literature by focusing exclusively on non-accelerated filers and by examining differences across four regulation regimes over a long window compared to prior studies. It provides evidence that the financial reporting benefit of SOX 404b is not transitional, but rather extends for a few years even after some firms discontinued the 404b audits.

中文翻译：

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小公司的内部控制和财务报告质量

2010年的《多德-弗兰克法案》（Dodd-Frank Act）豁免了小型且未加急的申报者遵守《萨班斯-奥克斯利法案》（SOX）第404b条的内部控制审核。但是，这些公司必须遵守其他内部控制法规，即分别从2002年和2007年开始的SOX第302节和404a节。在2004年至2010年期间，这些公司中的一小部分还自愿采用了（有时是放弃）了404b节。这项研究的目的是调查SOX引入的一系列内部控制法规对小公司财务报告质量的影响。本研究的研究设计是经验性的。使用未签名和已签名的全权应计收益来衡量财务报告质量，作者比较了2000年至2010年期间四种监管制度下的采用者和非采用者的财务报告质量：PRESOX，SOX 302，SOX 404a和SOX 404b。结果表明，大多数采用者和非采用者都从中受益。 SOX 302和404a与PRESOX期间相比。但是，当从SOX 302迁移到SOX 404a时，只有非采用者逐渐获得收益。同样，第404b节使PRESOX时期内具有实质性弱点的公司以及报告质量最低的无实质性弱点的公司受益。本研究有助于为关于是否增加SOX阈值的重要政策辩论提供信息404b豁免。它显示了通过404b条审核的公司的增量收益，即使它们遵守302条和404a条。所以，将豁免扩大到更多公司将导致404b的报告质量收益损失。该研究为文献做出了贡献，专门研究了非加速申报者，并且与以前的研究相比，在较长的时间范围内研究了四种监管制度之间的差异。它提供了证据，表明SOX 404b的财务报告收益不是过渡性的，而是延续了数年，即使在某些公司终止404b审计之后也是如此。