Capture theories predict that revolving-door regulators will make rules friendly to industry interests at the expense of public interests.
Under the market-expansion theory, revolving-door regulators do not passively respond to the needs of regulated industries as the capture and human-capital theories predict; they proactively create and maintain the needs through market-expansion efforts.
Recognizing regulators' market-expansion incentive has important implications for a wide range of policy issues--issues that either have not been examined from the revolving-door point of view, or have been examined from the revolving-door point of view but have not benefited from the insights offered by the market-expansion theory.
194) Although conventional analysis recognizes the role of regulators' personal interests in determining agency behavior, (195) little attention has been paid to the role of regulators' revolving-door motivations in agency aggrandizement.
203) In scenarios where there are no revolving-door concerns, however, Chevron deference would still be preserved under this approach.
Contrary to the conventional revolving-door theories, the market-expansion theory and, to a lesser extent, the human-capital theory point to the possibility that regulators may engage in more aggressive enforcement to benefit their post-government careers.
Research question 2 addressed in a more specific sense perceptions regarding independence and the revolving-door phenomenon: "What impact, if any, will the combinations of the following revolving-door phenomenon's factors have on the perceptions of members of state boards of accountancy regarding the independence of CPA firms: 1) position held by the former auditor, 2) the client's accounting position accepted by the former auditor, and 3) the length of time of the cooling-off period?
Section B of the questionnaire contained six statements with varying permutations of the revolving-door phenomenon.
These results suggest that members of state boards of accountancy perceive that a cooling-off period can significantly reduce the negative impact on independence from the revolving-door phenomenon of former audit managers accepting controllers' positions with former clients.
Increasing the length of the cooling-off period from a one-year period to a two-year period (statement 6) appeared to have reduced the revolving-door even further: 76.
These results suggest that members of state boards of accountancy perceive that having a cooling-off period can significantly reduce the possible negative impact on independence from the revolving-door phenomenon of former audit engagement partners accepting the CAO positions with former audit clients.
SOA was passed in part as a reaction to the revolving-door phenomenon.