 Information Content of Internal Control Weaknesses: The Evidence from JapanRiku Nishizaki, Yudai Takano and Fumiko Takeda The International Journal of Accounting, 2014, vol. 49, issue 1, 1-26 Abstract: This paper investigates how capital markets in a code-law country, Japan, react to the disclosure of internal control weaknesses (ICW). The Japanese government attempted to implement a more concise, efficient, and, thus, less strict internal control reporting system than Section 404 of the US-SOX. In fact, for the first two years, the disclosure rate of ICW has been much lower in Japan than in the U.S. While market reactions to the disclosure of ICW are not significantly different from zero in our event study analysis, they become significantly negative after controlling for other information released around the disclosure date, audit quality, and other firm attributes. Our results are consistent with the notion that the disclosure of ICW is informative to the market because it is less frequent and exceptional in Japan. Keywords: Internal control; Event study; Sarbanes–Oxley Act; Disclosure; Regulation; Institution (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:49:y:2014:i:1:p:1-26 DOI: 10.1016/j.intacc.2014.01.009 Access Statistics for this article The International Journal of Accounting is currently edited by A. R. Abdel-Khalik More articles in The International Journal of Accounting from Elsevier |
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