Internal Control Weakness and Cost of Equity: Evidence from SOX Section 404 Disclosures
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- Maria Ogneva
- a University of Southern California
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- K. R. Subramanyam
- a University of Southern California
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- K. Raghunandan
- b Florida International University
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説明
<jats:p>We examine the association between cost of equity and internal control weakness (ICW) for firms that filed first-time Section 404 reports with the SEC. Using several proxies, we find higher implied cost of equity associated with ICW firms than for a control sample of firms that disclosed no ICW. However, the higher cost of equity associated with ICW disappears after controlling for primitive firm characteristics and for analyst forecast bias. Overall, we find that, on average, ICWs are not directly associated with higher cost of equity.</jats:p>
収録刊行物
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- The Accounting Review
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The Accounting Review 82 (5), 1255-1297, 2007-10-01
American Accounting Association
