The Demand for Internal Auditors following Accounting and Operational Failures

• 成果类型: Article
• 署名作者: Ege, Matthew S.; Kim, Young Hoon; Wang, Dechun
• 署名单位: Texas A&M University System; Texas A&M University College Station; Mays Business School; George Mason University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0484
• 发表日期: 2023
• 页码: 185-210
• 关键词: CORPORATE GOVERNANCE; Sarbanes-Oxley; RESTATEMENTS; COMMITTEE; QUALITY

摘要

Using a comprehensive database of U.S. internal auditor job postings, we find that firms are about 10 percent more likely to post an internal auditor job after the revelation of accounting and operational failures. Also, the demand for internal auditors is stronger when a failure is more severe. Among firms posting internal auditor jobs, firms demand higher-quality internal auditors in response to a failure compared with when there has not been a recent failure. We find evidence of internal audit demand spillovers through connected directors, which helps mitigate concerns that the primary results are due to replacing internal auditors that recently left or due to endogenous links between hiring internal auditors and failure revelations. Overall, our evidence suggests that firms demand internal auditors to help ensure high-quality financial reporting and effective operations.