Corporate Governance and Internal Control over Financial Reporting: A Comparison of Regulatory Regimes

• 成果类型: Article
• 署名作者: Hoitash, Udi; Hoitash, Rani; Bedard, Jean C.
• 署名单位: Northeastern University; Bentley University; University of New South Wales Sydney
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2009.84.3.839
• 发表日期: 2009
• 页码: 839-867
• 关键词: audit committee characteristics; BOARD; expertise; COMPENSATION; INDEPENDENCE; determinants; weaknesses; disclosure

摘要

This study examines the association between corporate governance and disclosures of material weaknesses (MW) in internal control over financial reporting. We study this association using MW reported under Sarbanes-Oxley Sections 302 and 404, deriving data on audit committee financial expertise from automated parsing of member qualifications from their biographies. We find that a lower likelihood of disclosing Section 404 MW is associated with relatively more audit committee members having accounting and supervisory experience, as well as board strength. Further, the nature of MW varies with the type of experience. However, these associations are not detectable using Section 302 reports. We also find that MW disclosure is associated with designating a financial expert without accounting experience, or designating multiple financial experts. We conclude that board and audit committee characteristics are associated with internal control quality. However, this association is only observable under the more stringent requirements of Section 404.