Everybody acts differently while they are being watched, especially by those with authority. Whether it's your boss sitting in the next cubicle next door or a cop car driving behind you, observation leads to behavioral changes. A new paper from Bret Johnson, associate professor of accounting at Costello College of Business George Mason University, finds that large corporate entities are also susceptible to the so-called "regulatory observer effect." Recently published in Review of Accounting Studies, the paper uncovers how being under SEC investigation likely impacts a company's behavior, whether or not action is taken against it.
