JOURNAL OF LEGAL, ETHICAL AND REGULATORY ISSUES Journal of Legal, Ethical and Regulatory Issues, Volume

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  • Volume 10, Number 1 ISSN 1544-0036

    JOURNAL OF LEGAL, ETHICAL AND REGULATORY ISSUES

    An official Journal of the Allied Academies, Inc.

    John Yeargain, Co-Editor Southeastern Louisiana University

    Aileen Smith, Co-Editor Stephen F. Austin State University

    Academy Information is published on the Allied Academies web page

    www.alliedacademies.org

    The Journal of Legal, Ethical and Regulatory Issues is published by the Allied Academies, Inc., a non-profit association of scholars, whose purpose is to support and encourage research and the sharing and exchange of ideas and insights throughout the world.

    W hitney Press, Inc. Printed by Whitney Press, Inc.

    PO Box 1064, Cullowhee, NC 28723 www.whitneypress.com

  • Authors provide the Academy with a publication permission agreement. Allied Academies is not responsible for the content of the individual manuscripts. Any omissions or errors are the sole responsibility of the individual authors. The Editorial Board is responsible for the selection of manuscripts for publication from among those submitted for consideration. The Editors accept final manuscripts in digital form and the Publishers make adjustments solely for the purposes of pagination and organization.

    The Journal of Legal, Ethical and Regulatory Issues is published by the Allied Academies, Inc., PO Box 2689, 145 Travis Road, Cullowhee, NC 28723, USA (828) 293-9151, FAX (828) 293-9407. Those interested in subscribing to the Journal, advertising in the Journal, submitting manuscripts to the Journal, or otherwise communicating with the Journal, should contact the Executive Director at info@alliedacademies.org.

    Copyright 2007 by Allied Academies, Inc., Cullowhee, NC

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    Journal of Legal, Ethical and Regulatory Issues, Volume 10, Number 1, 2007

    JOURNAL OF LEGAL, ETHICAL AND REGULATORY ISSUES

    John Yeargain, Co-Editor Southeastern Louisiana University

    Aileen Smith, Co-Editor Stephen F. Austin State University

    EDITORIAL REVIEW BOARD

    David Arnesen Seattle University arnesen@seattleu.edu

    Sandra McKay Southeastern Louisiana University smckay@selu.edu

    Eugene Calvasina Southern University & A & M College ejcalvasina@cox.net

    D.J. Parker University of Washington - Tacoma djparker@u.washington.edu

    Robert Cope Southeastern Louisiana University rcope2@selu.edu

    Bruce D. Phillips NFIB Research Foundation bruce.phillips@nfib.org

    Debbie DuFrene Stephen F. Austin State University ddufrene@sfasu.edu

    Daniel L Reynolds Middle Tennessee State University reynolds@mtsu.edu

    J. Keaton Grubbs Stephen F. Austin State University jkgrubbs@sfasu.edu

    Pamela P. Stokes Texas A&M University -- Corpus Christi pamela.stokes@tamucc.edu

    Evelyn Hume University of Texas - Pan American ehume@panam.edu

    Thomas R. Tudor University of Arkansas at Little Rock trtudor@ualr.edu

    Taylor Klett Sam Houston State University klett@shsu.edu

    Suzanne Pinac Ward University of Louisiana at Lafayette spward@louisiana.edu

    Douglas L Luke University of Texas at Dallas dlluke@swbell.net

    Robert L. Webster Ouachita Baptist University websterb@alpha.obu.edu

    Treba Marsh Stephen F. Austin State University tmarsh@sfasu.edu

    Raymond Zimmermann The University of Texas at El Paso rzimmer@utep.edu

    Roselie McDevitt Fairfield University rmcdevitt@mail.fairfield.edu

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    Journal of Legal, Ethical and Regulatory Issues, Volume 10, Number 1, 2007

    JOURNAL OF LEGAL, ETHICAL AND REGULATORY ISSUES

    CONTENTS OF VOLUME 10, NUMBER 1

    EDITORIAL REVIEW BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

    LETTER FROM THE EDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

    IMPACT OF THE SARBANES-OXLEY ACT ON ACCOUNTANT LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Jerry Wegman, University of Idaho

    PROPERTY LAW, PERSONHOOD AND ETHICS: STEM CELL RESEARCH & ITS IMPACT ON PROPERTY LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Ida M. Jones, California State University, Fresno

    KELO V. CITY OF NEW LONDON: IS EMINENT DOMAIN FOR ECONOMIC DEVELOPMENT PUBLIC USE OR PUBLIC ABUSE? . . . . . . . . . . . . . . . . . . . . . . . . 31 Linda L. Barkacs, University of San Diego Craig B. Barkacs, University of San Diego

    FEDERAL CIVIL RIGHTS LEGISLATION AND STATE SOVEREIGN IMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Debra D. Burke, Western Carolina University Malcolm Abel, Western Carolina University

    THE NATIONAL LABOR RELATIONS ACT AND NON-UNION EMPLOYERS: POLICY AND PRACTICE ISSUES IN A CHANGING ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Gerald E. Calvasina, Southern Utah University Eugene J. Calvasina, Southern University Richard V. Calvasina, University of West Florida

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    Journal of Legal, Ethical and Regulatory Issues, Volume 10, Number 1, 2007

    AUDITOR NEGLIGENCE LIABILITY TO THIRD PARTIES REVISITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 J. Keaton Grubbs, Stephen F. Austin State University Jack R. Ethridge, Jr., Stephen F. Austin State University

    THE EFFECT OF PUNISHMENT ON ETHICAL BEHAVIOR WHEN PERSONAL GAIN IS INVOLVED . . . . . . . . . . . . . . . . . . . . . . . 91 Kathleen Gurley, Fayetteville State University Paula Wood, Fayetteville State University Inder Nijhawan, Fayetteville State University

    FACULTY ETHICS FROM THE PERSPECTIVE OF COLLEGE OF BUSINESS ADMINISTRATORS . . . . . . . . . . . . . . . . . . . . . . . . . 105 Ruth B. McKay, Carleton University Linda A. Kidwell, University of Wyoming James A. Kling, Niagara University

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    Journal of Legal, Ethical and Regulatory Issues, Volume 10, Number 1, 2007

    LETTER FROM THE EDITORS

    Welcome to the Journal of Legal, Ethical and Regulatory Issues. This journal is published by the Allied Academies, Inc., a non profit association of scholars whose purpose is to encourage and support the advancement and exchange of knowledge, understanding and teaching throughout the world. The JLERI is a principal vehicle for achieving the objectives of the organization. The editorial mission of this journal is to publish empirical and theoretical manuscripts which advance understanding of business law, ethics and the regulatory environment of business.

    Readers should note that our mission goes beyond studies involving business law or the effect of legislation on businesses and organizations. We are also interested in articles involving ethics. In addition, we invite articles exploring the regulatory environment in which we all exist. These include manuscripts exploring accounting regulations, governmental regulations, international trade regulations, etc., and their effect on businesses and organizations. Of course, we continue to be interested in articles exploring issues in business law.

    The articles contained in this volume have been double blind refereed. The acceptance rate, 25%, conforms to the Allied Academies’ editorial policy.

    Please visit the Allied Academies’ web page to learn how to submit manuscripts for review as well as to view details of forthcoming conferences. We invite your comments and suggestions at any time. Please send these to info@alliedacademies.org.

    John Yeargain Southeastern Louisiana University

    Aileen Smith Stephen F. Austin State University

    www.alliedacademies.org

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    Journal of Legal, Ethical and Regulatory Issues, Volume 10, Number 1, 2007

    IMPACT OF THE SARBANES-OXLEY ACT ON ACCOUNTANT LIABILITY

    Jerry Wegman, University of Idaho

    ABSTRACT

    President Bush signed the Sarbanes-Oxley Act (SOA) into law on July 30, 2002. At that time he said that it brought about “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt”. The SOA was passed in response to corporate scandals involving Enron, WorldCom and others. It was intended to restore public confidence in our capital markets. Much of the SOA is directed at corporate and securities industry behavior. But the SOA also raises the regulatory bar far higher for the accounting profession, especially for accounts who audit public companies. The SOA created a new regulatory agency to oversee accountants’ work: the Public Company Accounting Oversight Board (PCAOB). The SOA also imposed high ethical standards, including prohibiting conflicts of interest and even potential conflicts of interest. Civil and criminal penalties for violations were increased. The net effect was to substantially increase the legal liability of accountants.

    Business schools are trying to include SOA materials into their curricula. However, as the AACSB publication BizEd pointed out in August 2005, there is a lack of material that is appropriate for classes in accounting and business law. This paper will help to fill that need. It reviews the origins and current attitudes towards the SOA. To provide context it reviews the law of accountant liability. The paper then examines and assesses those parts of the SOA that impact accountant liability, particularly the new regulatory agency and also accountant independence. A new conceptual framework for regulation is suggested, in which it is seen that the SOA is essentially a form of regulation that s