Does the Format of Internal Control Disclosures Matter? An Experimental Investigation of Nonprofessional Investor Behavior

Autor:	Amanuel F. Tadesse, Uday S. Murthy
Rok vydání:	2020
Předmět:	Economics and Econometrics 050208 finance business.industry Accounting 0502 economics and business 05 social sciences Control (management) 050201 accounting Business Audit Investor behavior Finance
Zdroj:	AUDITING: A Journal of Practice & Theory. 40:91-106
ISSN:	1558-7991 0278-0380
DOI:	10.2308/ajpt-17-171
Popis:	SUMMARY We investigate whether the format of internal control weakness (ICW) disclosures required by the Sarbanes-Oxley Act of 2002 influences perceptions of nonprofessional investors. Using a 2 × 2 between-participants experiment, we examine two facets of ICW disclosure formats: ICW presentation salience (high versus low) and ICW disaggregation type (disaggregated versus aggregated). We hypothesize and find evidence of an interactive effect between presentation salience and disaggregation type, such that investors perceive ICWs as less negative when they are saliently disclosed and this effect is enhanced when the material weakness is disaggregated into its individual control deficiencies. We also find evidence of moderated mediation such that high salience of ICW disclosures has a positive indirect effect on investing judgments through management trust, but only when the ICW is disaggregated into its individual control deficiencies.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::ac41338875f5d61dc21bcf6016f8264e https://doi.org/10.2308/ajpt-17-171 Zobrazit plný text záznamu