 Are voluntary internal control weakness disclosures in initial public offerings associated with managerial ability and subsequent financial reporting quality?Tiffany J. Westfall and Mark Myring Advances in accounting, 2022, vol. 59, issue C Abstract: This study examines whether voluntary disclosure of internal control weaknesses (ICWs) in IPO registration statements is associated with managerial ability and subsequent SOX 404 adverse audit opinions. Using a sample of IPO registrants that voluntarily disclosed ICWs in their registration statements, we examine the relationship between ICW disclosure, managerial ability, and subsequent material weaknesses in internal control. We find that IPO registrants with higher managerial ability are more likely to disclose ICWs voluntarily than other registrants. Further, we find evidence that registrants that include voluntary ICW disclosures are more likely to subsequently receive an adverse SOX 404 audit opinion. Additionally, we find evidence that registrants are associated with negative cumulative abnormal returns when an auditor issues an adverse SOX 404 auditor opinion regardless of whether the ICWs were disclosed in the registration statement. Keywords: Internal control; Voluntary disclosure; Managerial ability; Material weakness; Initial public offerings; SOX 404 (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:advacc:v:59:y:2022:i:c:s0882611022000360 DOI: 10.1016/j.adiac.2022.100617 Access Statistics for this article Advances in accounting is currently edited by Dennis Caplan More articles in Advances in accounting from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.