Journal ArticleDOI
Fraudulent Financial Reporting: Consideration of Industry Traits and Corporate Governance Mechanisms
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TLDR
In this paper, the authors provide insight into financial statement fraud instances investigated during the late 1980s through the 1990s within three volatile industries (technology, health care, and financial services) and highlight important corporate governance differences between fraud companies and no-fraud benchmarks on an industry-by-industry basis.Abstract:
This paper provides insight into financial statement fraud instances investigated during the late 1980s through the 1990s within three volatile industries—technology, health care, and financial services—and highlights important corporate governance differences between fraud companies and no‐fraud benchmarks on an industry‐by‐industry basis. The fraud techniques used vary substantially across industries, with revenue frauds most common in technology companies and asset frauds and misappropriations most common in financial‐services firms. For each of these three industries, the sample fraud companies have very weak governance mechanisms relative to no‐fraud industry benchmarks. Consistent with prior research, the fraud companies in the technology and financial‐services industries have fewer audit committees, while fraud companies in all three industries have less independent audit committees and less independent boards. In addition, this study provides initial evidence that the fraud companies in the techno...read more
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Audit Committee Characteristics and Restatements
TL;DR: In this article, the impact of certain audit committee characteristics identified by the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (BRC) on the likelihood of financial restatement was examined.
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Audit Committee Quality and Internal Control: An Empirical Analysis
TL;DR: In this article, the authors examined the association between audit committee quality and the quality of corporate internal control and found that independent audit committees and audit committees with financial expertise are significantly less likely to be associated with the same problems.
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Ownership structure, corporate governance, and fraud: Evidence from China
TL;DR: Li et al. as mentioned in this paper examined whether ownership structure and boardroom characteristics have an effect on corporate financial fraud in China and found that the proportion of outside directors, the number of board meetings, and the tenure of the chairman are associated with the incidence of fraud.
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Corporate Governance and the Audit Process
TL;DR: In this article, the authors examine the impact of various corporate governance factors, such as the board of directors and the audit committee, on the audit process, and find that auditors view management as the primary driver of corporate governance, and that the inclusion of top management in the corporate governance mosaic is inconsistent with agency theory's prescription of the board and other mechanisms serving as a means to independently oversee management's actions to protect stakeholders.
Journal ArticleDOI
The Disclosure of Material Weaknesses in Internal Control after the Sarbanes‐Oxley Act
Weili Ge,Sarah E. McVay +1 more
TL;DR: In this article, the authors focus on a sample of 261 companies that disclosed at least one material weakness in internal control in their SEC filings after the effective date of the Sarbanes-Oxley Act of 2002 and find that poor internal control is usually related to an insufficient commitment of resources for accounting controls.
References
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Journal ArticleDOI
Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC*
TL;DR: In this article, the authors investigate the extent to which the earnings manipulations can be explained by earnings management hypotheses and the relation between earnings manipulation and weaknesses in firms' internal governance structures, and the capital market consequences experienced by firms when the alleged earnings manipulation are made public.
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Shareholder Litigation and Corporate Disclosures
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Detecting GAAP violation: implications for assessing earnings management among firms with extreme financial performance
TL;DR: The authors presented a model to detect earnings management among firms experiencing extreme financial performance, and compared the model's performance to that of discretionary accrual models, and found that the model provides timely assessments of the likelihood of manipulation, and that model-based trading strategies earn significant abnormal returns.
Posted Content
The Financial and Market Effects of the SEC's Accounting and Auditing Enforcement Releases
TL;DR: In this article, the authors explored three questions related to the SEC's accounting enforcement program: (1) what types of accounting and auditing problems motivate enforcement actions, (2) what are the consequences of investigations on targets' financial statements, managers, and auditors, and (3) how do investors and other market agents view their actions?
Journal ArticleDOI
The Financial and Market Effects of the SEC's Accounting and Auditing Enforcement Releases
TL;DR: In this article, the authors explore three questions related to the SEC's accounting enforcement program: (1) what types of accounting and auditing problems motivate enforcement actions, (2) what are the consequences of investigations on targets' financial statements, managers, and auditors, and (3) how do investors and other market agents view SEC's actions.