Does investment efficiency improve after the disclosure of material weaknesses in internal control over financial reporting?

• 成果类型: Article
• 署名作者: Cheng, Mei; Dhaliwal, Dan; Zhang, Yuan
• 署名单位: University of Arizona; Korea University; University of Texas System; University of Texas Dallas
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2013.03.001
• 发表日期: 2013
• 关键词: sarbanes-oxley act; corporate governance; control deficiencies; AGENCY COSTS; QUALITY; firm; INFORMATION; earnings; equity; determinants

摘要

We provide more direct evidence on the causal relation between the quality of financial reporting and investment efficiency. We examine the investment behavior of a sample of firms that disclosed internal control weaknesses under the Sarbanes-Oxley Act. We find that prior to the disclosure, these firms under-invest (over-invest) when they are financially constrained (unconstrained). More importantly, we find that after the disclosure, these firms' investment efficiency improves significantly. (C) 2013 Elsevier B.V. All rights reserved.