But in a , David H. Erkens and Sarah E. Bonner, of the University of Southern California's Marshall School of Business, apply the concept of status-seeking to companies, and the financial experts they appoint to their boards' audit committees. Looking at S&P 1500 firms from 1999 to 2008, they find that higher-status directors, at prominent companies, actually had a negative impact on the quality of the audit committees they served on.

It should come as no surprise that prominent companies tend to seek directors with impressive job titles, more elite degrees, club memberships and the like -- not to mention other high-profile board seats. But in practice, what that means is that these companies may tend to pass on "typical financial experts (retired auditors) [who] have lower director status (board seats, trusteeships, social club memberships, and elite education) than typical directors (retired CEOs)," Erkens and Bonner find.

They add that "this status gap is larger for higher status firms (larger, better connected and more admired firms.)" And thus, those prominent firms "are less likely to appoint financial experts" -- perhaps out of the justifiable fear of mixing with the hoi polloi. But whatever the reason, the paper says: "Status-related concerns reduce the demand for financial expertise on audit committees" when the companies appoint directors. And the quality suffers.

The findings have clear implications for regulators. As the authors point out, for example, SEC rule revisions in recent years allow individuals without actual experienced-based knowledge of GAAP to qualify as financial experts for purposes of audit committee composition. And this has enabled many companies to avoid, or significantly delay, appointing experienced financial experts to their audit committees. These SEC rule changes, they argue, moved the regulatory atmosphere "away from the rapid improvement of financial reporting that was intended by Sarbox."

The paper goes on: "As a consequence, many firms were left vulnerable to financial reporting problems." And, it concludes, "Our findings point to an example of the 'regulated getting to the regulators' and perhaps doing so mostly because of directors' concerns for their own welfare."