How does internal control regulation affect financial reporting?

• 成果类型: Article
• 署名作者: Altamuro, Jennifer; Beatty, Anne
• 署名单位: University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2009.07.002
• 发表日期: 2010
• 关键词: control deficiencies; Investor protection; earnings management; QUALITY; equity

摘要

Internal control regulation effectiveness remains controversial given the recent financial Crisis. To address this issue we examine the financial reporting effects of the Federal Depository Insurance Corporation Improvement Act (FDICIA) internal control provisions. Exemptions from these provisions for banks with assets under $500 million and for non-US banks provides two unaffected control samples. Our difference-indifferences method suggests that FDICIA-mandated internal control requirements increased loan-loss provision validity, earnings persistence and cash-flow predictability and reduced benchmark-beating and accounting conservatism for affected versus unaffected banks. More pronounced effects in interim versus fourth quarters Suggest that greater auditor presence substitutes for internal control regulation. (C) 2009 Elsevier B.V. All rights reserved.