Disclosure of internal control material weaknesses and optimism in analyst earnings forecasts

2022 ◽  
pp. 100545
Author(s):  
Wanyun Li
Keyword(s):  
Internal Control ◽  
Earnings Forecasts ◽  
Control Material ◽  
Material Weaknesses ◽  
Analyst Earnings

scholarly journals Material Weaknesses in Tax-Related Internal Controls and Last Chance Earnings Management

2017 ◽  
Vol 39 (1) ◽  
pp. 25-44 ◽  
Author(s):  
Cristi A. Gleason ◽  
Morton Pincus ◽  
Sonja Olhoft Rego
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Internal Control ◽  
Internal Controls ◽  
Early Years ◽  
Control Material ◽  
Material Weaknesses ◽  
Implementation Period ◽  
Tax Expense

ABSTRACT We investigate the consequences of tax-related internal control material weaknesses (ICMWs) for financial reporting. We hypothesize that the presence of ineffective controls over the tax function makes earnings management through the income tax accrual (both income increasing and income decreasing) easier to implement relative to firms with effective controls. We also predict that the remediation of tax-related ICMWs has the effect of constraining earnings management through the tax accrual. The results provide support for our predictions. We also find that last chance earnings management via tax-related ICMWs is concentrated in the early years of our sample, during the initial SOX implementation period. Our results suggest that tax-related ICMWs were initially associated with greater tax-expense management but that SOX internal control assessments subsequently improved the quality of financial reporting by reducing opportunities for tax-expense management.

The Incremental Informativeness of the Sentiment of Conference Calls for Internal Control Material Weaknesses

2017 ◽  
Vol 15 (1) ◽  
pp. 11-27 ◽  
Author(s):  
Ting Sun
Keyword(s):  
Deep Learning ◽  
Internal Control ◽  
Conference Calls ◽  
Control Material ◽  
Baseline Model ◽  
Material Weaknesses ◽  
Prior Literature ◽  
Ibm Watson

ABSTRACT Using a deep-learning-based textual analyzer provided by IBM Watson, this paper obtains scores measuring the overall sentiment and emotion of “joy” from the transcripts of conference calls and uses them as additional predictors of internal control material weaknesses (ICMWs), combined with other determinants of ICMWs suggested by prior literature (i.e., Doyle, Ge, and McVay 2007; Ashbaugh-Skaife, Collins, and Kinney 2007). The results indicate that, with the incorporation of the sentiment features (especially the score of “joy”), the explanatory ability of the model improves significantly, as compared to that of the baseline model that merely utilizes the major ICMW determinants.

Internal Control Material Weaknesses and CFO Compensation*

2011 ◽  
Vol 29 (3) ◽  
pp. 768-803 ◽  
Author(s):  
Rani Hoitash ◽  
Udi Hoitash ◽  
Karla M. Johnstone
Keyword(s):  
Internal Control ◽  
Control Material ◽  
Material Weaknesses ◽  
Cfo Compensation

Internal Control Material Weaknesses and Foreign Corrupt Practices Act Violations

2018 ◽  
Vol 3 (1) ◽  
pp. A80-A104
Author(s):  
Yi-Hung Lin ◽  
Meghann A. Cefaratti ◽  
Chih-Chen Lee ◽  
Hua-Wei Huang
Keyword(s):  
Internal Control ◽  
Regulatory Compliance ◽  
Internal Controls ◽  
Control Environment ◽  
Control Material ◽  
Foreign Corrupt Practices Act ◽  
Material Weaknesses ◽  
And Control ◽  
The Relationship ◽  
Jel Classifications

ABSTRACT The purpose of this research is to investigate the relationship between internal control material weaknesses (ICMWs), as measured by presence, number, and type, and Foreign Corrupt Practices Act (FCPA) violations. Our results indicate that firms with ICMWs are more likely to violate the FCPA and firms with multiple ICMWs have a higher likelihood of violating the FCPA than firms with fewer ICMWs. Further, firms with ICMWs related to the risk assessment, control environment, and control activities components of internal controls (based on the COSO Internal Control—Integrated Framework) present a higher risk of FCPA violations than firms without ICMWs in those areas. These findings substantiate the importance of effective internal controls in supporting firms' regulatory compliance. JEL Classifications: M42; M48; D73.

National Culture and Internal Control Material Weaknesses Around the World

2014 ◽  
Author(s):  
Kiridaran (Giri) Kanagaretnam ◽  
Gerald J. Lobo ◽  
Chen Ma ◽  
Jian Zhou
Keyword(s):  
National Culture ◽  
Internal Control ◽  
Control Material ◽  
Material Weaknesses ◽  
The World
Sign in / Sign up

Export Citation Format

Share Document