The DOI matches its Crossref record; 23 of the 23 references it cites were found in a registry or an index.
The Effect of SOX Internal Control Deficiencies and Their Remediation on Accrual Quality
Abstract
This paper investigates the effect of internal control deficiencies and their remediation on accrual quality. We first document that firms reporting internal control deficiencies have lower quality accruals as measured by accrual noise and absolute abnormal accruals relative to firms not reporting internal control problems. Second, we find that firms that report internal control deficiencies have significantly larger positive and larger negative abnormal accruals relative to control firms. This finding suggests internal control weaknesses are more likely to lead to unintentional errors that add noise to accruals than intentional misstatements that bias earnings upward. Third, we document that firms whose auditors confirm remediation of previously reported internal control deficiencies exhibit an increase in accrual quality relative to firms that do not remediate their control problems. Finally, we find firms that receive different internal control audit opinions in successive years exhibit changes in accrual quality consistent with changes in internal control quality. Collectively, our cross-sectional and intertemporal change tests provide strong evidence that the quality of internal control affects the quality of accruals.
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Cites
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Self-citation
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Cited by
A review of archival auditing research
DeFond, M., & Zhang, J. (2014) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2014.09.002 · Cited by 3,188
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Dichev, I. D., Graham, J. R., Harvey, C. R., & Rajgopal, S. (2013) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2013.05.004 · Cited by 1,103
Internal control and management guidance
Feng, M., Li, C., & McVay, S. (2009) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2009.09.004 · Cited by 678
The importance of the internal information environment for tax avoidance
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Metadata
- Authors
- Ashbaugh-Skaife, H., Collins, D. W., Kinney, W. R., & LaFond, R.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 2008-01-01
- Volume
- 83
- Issue
- 1
- Pages
- 217-250
- ISSN
- 0001-4826 (ISSN-L)
- 1558-7967
- OpenAlex
- W3122726372
- Cited by
- 936
- References
- 23
- FWCI
- 128.34
- Type
- journal article
- Language
- en
- Open access
- closed
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- Ashbaugh-Skaife, H., Collins, D. W., Kinney, W. R., & LaFond, R. (2008). The Effect of SOX Internal Control Deficiencies and Their Remediation on Accrual Quality. The Accounting Review. https://doi.org/10.2308/accr.2008.83.1.217
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
