Abstract

http://ssrn.com/abstract=954057
 
 

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


Udi Hoitash


Northeastern University

Rani Hoitash


Bentley University - Department of Accountancy

Jean C. Bedard


Bentley University - Department of Accountancy

November 1, 2008

Accounting Review, Vol. 84, No. 3, p. 839, 2009

Abstract:     
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.

Number of Pages in PDF File: 50

Keywords: Internal controls, corporate governance, audit committee, financial expertise

JEL Classification: G34, G38, M41, M43, M49

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Date posted: December 29, 2006 ; Last revised: December 5, 2012

Suggested Citation

Hoitash, Udi and Hoitash, Rani and Bedard, Jean C., Corporate Governance and Internal Control over Financial Reporting: A Comparison of Regulatory Regimes (November 1, 2008). Accounting Review, Vol. 84, No. 3, p. 839, 2009. Available at SSRN: http://ssrn.com/abstract=954057

Contact Information

Udi Hoitash
Northeastern University ( email )
360 Huntington Ave.
Boston, MA 02115
United States
671-373-5839 (Phone)

Rani Hoitash
Bentley University - Department of Accountancy ( email )
175 Forest Street
Waltham, MA 02452-4705
United States
Jean C. Bedard (Contact Author)
Bentley University - Department of Accountancy ( email )
175 Forest Street
Waltham, MA 02452
United States
781-891-2410 (Phone)
781-891-2896 (Fax)
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