Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Andrew Finley

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

2018 James O Smith


I investigate whether investors have statistically significant negative reactions to the local clients of sanctioned auditors at the time of the PCAOB’s announcement of an enforcement action against that auditor. I also investigate whether or not the significance of the reactions has uniformly varied over time to account for the possibility of changing comprehensiveness in PCAOB enforcement actions. I measure abnormal returns using CAPM over three different measurement periods. I also disaggregate the data by year of enforcement action. 6 of the 27 data sets produced a statistically significant negative abnormal return suggesting that clients of sanctioned auditors do experience statistically significant abnormal negative returns at the time of the PCAOB’s announcement of the enforcement action. The significance of the abnormal returns did not vary overtime.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.