دانلود رایگان مقاله اثرات سرایت بحران صنعت بر افشای کنترل داخلی ضعف مواد

Abstract

This study examines whether there is an industry contagion effect for negative market reactions to internal control material weakness (ICMW) disclosures. From a sample of companies experiencing market share price declines to disclosures of ICMW over the years 2005–2014, results indicate that peer industry companies also experience market share price declines. We also find that the decline in share prices is related to accounting quality in that peer industry companies with higher accrual, relative to cash flow, components of earnings have larger negative market reaction compared to companies with lower accrual components of earnings. Our study contributes to the literature streams examining accounting information transfer and internal control quality. Data availability: Data are publicly available from sources identified in the paper.

5. Conclusion and limitations

The overall objective of this study is to provide academics and regulators with a better understanding of the impacts of ICMW disclosures on peer industry firms. We empirically examine whether peer industry firms experience share price declines and whether peer industry firm CARs are associated with cross-sectional differences. Results indicate that when firms report ICMWs and experience share price declines, peer industry companies also experience share price declines. While the short term contagion effect is strongest in the early years of our study, the effect persists throughout the duration of the study and the long term effect becomes even stronger in the later years. Further analysis indicates that the declines in peer share prices are associated with accounting quality in that peer industry firms with higher accrual components of earnings have larger negative market reaction compared to firms with lower accrual components of earnings. Finally, there does appear to be a learning effect, in that industry peer firms that experience the greatest contagion effect are more likely to actually report an ICMW following a peer industry firm reporting an ICMW