Does internal control over financial reporting really alleviate agency conflicts?

Baolei Qi, Liuchuang Li, Qing Zhou, Jinghui Sun

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This study investigates whether internal control over financial reporting
(ICFR) alleviates the managerial expropriation of corporate resources. We do
this by examining the potential effects of material weaknesses in internal
control on the values of corporate cash holdings and capital expenditures. Our
findings suggest that ICFR facilitates the scrutiny and discipline of capital
markets and thus alleviates the agency problems. Our results support the
premise that high financial reporting quality impairs managers’ abilities to use
corporate resources in a self-serving manner.
LanguageEnglish
Pages1101-1125
Number of pages25
JournalAccounting and Finance
Volume57
Issue number4
DOIs
Publication statusPublished - 2017
Externally publishedYes

Fingerprint

Resources
Financial reporting
Agency conflict
Internal control
Financial reporting quality
Capital expenditures
Cash holdings
Material weakness
Agency problems
Managers
Expropriation

Keywords

  • agency conflicts
  • capital expenditures
  • cash holdings
  • internal control

Cite this

Qi, Baolei ; Li, Liuchuang ; Zhou, Qing ; Sun, Jinghui. / Does internal control over financial reporting really alleviate agency conflicts?. In: Accounting and Finance. 2017 ; Vol. 57, No. 4. pp. 1101-1125.
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Does internal control over financial reporting really alleviate agency conflicts? / Qi, Baolei; Li, Liuchuang; Zhou, Qing; Sun, Jinghui.

In: Accounting and Finance, Vol. 57, No. 4, 2017, p. 1101-1125.

Research output: Contribution to journalArticleResearchpeer-review

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