Nowadays, internal control and profitability are becoming very important to achieve favorable results in the profits of any economic organization. The objective of this research was to describe the ...effect of internal control on profitability in a general services company Chosica, 2021, for this purpose a quantitative study of the applied type was conducted, with a non-experimental design, cross-sectional and descriptive scope, applying the questionnaire and documentary analysis to analyze each variable. In the results it was found that the level of internal control is at a low level with 62%, the analysis of profitability showed a minimal increase in the ratios of the period 2021, compared to 2020, showing levels of ROA 10%, ROE 19%, ROCE 21% and ROS 10%. thus, reaching the conclusion that internal control has a positive effect on the profitability of the company, so the organization must make a more efficient internal control creating shared values in the collaborators to improve the results in profitability and thus achieve institutional objectives.
•The credit default risk of listed companies hurts stock returns, the higher the credit default risk, the more negative the market's reaction.•Firms' internal control quality can positively moderate ...the relationship between credit default risk and stock returns.•The negative effect of credit risk on stock return is more significant in non-state-owned enterprises.
This paper selects the data of China's A-share listed companies from 2012 to 2022 as a research sample to explore the relationship between the credit default risk of listed companies and stock return. It is found that the credit default risk of listed companies hurts stock return; enterprises with high quality of internal control motivate enterprises to carry out effective risk management and reduce the impact of credit default risk on enterprise operation compared with state-owned enterprises, the negative effect of credit risk on stock return is more significant in non-state-owned enterprises.
We examine whether the reputation incentives of audit committee members are associated with their effectiveness in monitoring the financial reporting process. Prior research assumes that audit ...committee members allocate their effort proportionately across all memberships on which they serve. However, our findings suggest that audit committee members with multiple audit committee memberships tend to focus their attention on the memberships that provide them with the greatest reputation incentives. Specifically, firms with a larger proportion of audit committee members where the membership is the most prominent are associated with higher financial reporting quality and more effective monitoring of internal control. Additional tests reveal that audit committee members’ reputation incentives are driving our results rather than independent non‐audit committee members’ reputation incentives. We conclude that reputation is a strong incentive for audit committee members, such that it influences their monitoring effectiveness over the financial reporting process.
SUMMARY
This paper investigates the effect of human resource investment in internal control over financial reporting on the disclosure of internal control weaknesses at both the firm and the ...individual department level. Using a unique reporting requirement for Korean-listed firms, this study uses the ratio of the number of employees involved with the implementation of internal controls (hereafter, IC personnel) to the total number of employees of the firm as a proxy for a firm's human resource investment in internal control. We find that the proportion of IC personnel and the change of the proportion within the firm and several key departments are negatively associated with the disclosure of internal control weaknesses. We also find that a change in IC personnel is positively associated with the likelihood of remediation of the internal control weaknesses. These findings provide valuable insights into the role of human resource investment in determining the strength of a firm's internal controls over financial reporting.
Highlights • Most human genes are expressed in all tissues to some extent • Housekeeping genes may be defined by constant level of expression across tissues • We use RNA-seq data to provide a list of ...3804 human housekeeping genes • Several exceptionally uniform genes are suggested as control genes for RT-PCR.
SUMMARY
We investigate whether the concern of shareholder litigation motivates auditors to disclose internal control weaknesses. We document that issuing adverse internal control opinions reduces the ...likelihood of auditors being named with their clients as defendants in shareholder lawsuits. This finding suggests that auditors can reduce their legal liability arising from failed financial statement audits by increasing the quality of internal control audits. Consistent with this expectation, we find that auditors are more likely to issue such opinions in a timely manner for clients with higher ex ante litigation risk. Overall, our evidence suggests that the threat of litigation provides an incentive rather than a disincentive for auditors to issue adverse internal control opinions for clients with higher litigation risk.
Data Availability: The data are available from public sources indicated in the paper.
JEL Classifications: M42; K41.
The purpose of this study is to analyze how the expertise of internal accounting control personnel impacts financial statement conservatism. This study analyzed companies listed on the Korean stock ...market. Listed companies in Korea have been disclosing information on internal accounting personnel since 2012. Using a fixed-effect regression model, an analysis of 3,276 firm-years from 2012 to 2018 shows a positive correlation between the expertise of internal accounting control personnel and financial statement conservatism. The results from Ball and Shivakumar’s (2006) CF, DD, and Jones models are all significant at the 1% level, enhancing the robustness of the study’s findings. The coefficients were 0.872, 0.869, and 0.846, and the t-values were 3.93, 3.95, and 3.83 in each model. This indicates that firms with CPAs (Certified Public Accountant) among their internal accounting control personnel show stronger tendencies toward conservatism compared to those without CPAs. Furthermore, an analysis based on the firm ownership structure reveals a positive correlation between internal accounting control personnel expertise and financial statement conservatism in a non-Chaebol subsample (coefficient = 1.043, t-value = 3.58 in CF model); however, the results in the Chaebol subsample were not significant. This suggests that while having CPAs involved in non-Chaebol firms’ internal control is effective, it is not effective in Chaebol companies that are highly influenced by their owners.
ABSTRACT
The regulatory reform of internal controls (ICs) in China mandates that certain firms incorporate corporate social responsibility (CSR) engagement into ICs and issue IC reports. Using a ...staggered difference-in-differences research design, we find that IC effectiveness has worsened following this reform, but this deterioration is partially mitigated when mandated firms report their CSR engagement. Additional analyses demonstrate that this deterioration is further lessened when CSR reports are prepared in accordance with Global Reporting Initiative reporting guidelines or assured by external auditors and when firms spend more on CSR activities. Finally, cross-sectional analyses suggest that CSR engagement mitigates the deterioration in IC effectiveness more in non–state-owned enterprises and in firms that have better financial performance, lack political connections, or are located in regions with higher market development or social trust.
Data Availability: Data are available from the public sources cited in the text.
JEL Classifications: M4; M48.
