Institutional ownership and internal control material weakness.: An article from: Quarterly Journal of Finance and Accounting

This digital document is an article from Quarterly Journal of Finance and Accounting, published by University of Nebraska-Lincoln on March 22, 2010. The length of the article is 10919 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.

From the author: In this paper we examine the relationship between the composition of a firm's institutional ownership and the existence of internal control material weaknesses (ICMWs) under SOX Sections 302 and 404. We find a significantly positive relationship between the level of total institutional ownership and ICMW existence. The positive relationship is mainly driven by the transient investors who, with short-term investment horizons, may have little incentive to engage in costly and effective monitoring. When partitioning ICMWs into pervasive (more severe) and contained (less severe) types, we find that firms with pervasive ICMWs are associated with a lower (higher) level of dedicated (transient) institutional ownership. We also find that firms with pervasive ICMWs have significantly fewer resources to invest in internal control systems than do firms with contained ICMWs.

Citation Details
Title: Institutional ownership and internal control material weakness.
Author: Alex P. Tang
Publication:Quarterly Journal of Finance and Accounting (Magazine/Journal)
Date: March 22, 2010
Publisher: University of Nebraska-Lincoln
Volume: 49 Issue: 2 Page: 93(25)

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