Internal Control Over Financial Reporting and Managerial Rent Extraction: Evidence from the Profitability of Insider Trading

@article{Skaife2013InternalCO,
  title={Internal Control Over Financial Reporting and Managerial Rent Extraction: Evidence from the Profitability of Insider Trading},
  author={H. A. Skaife and David Veenman and Daniel Wangerin},
  journal={Journal of Accounting and Economics},
  year={2013},
  volume={55},
  pages={91-110}
}
  • H. A. Skaife, David Veenman, Daniel Wangerin
  • Published 2013
  • Business
  • Journal of Accounting and Economics
  • This paper examines the association between ineffective internal control over financial reporting and the profitability of insider trading. We predict and find that the profitability of insider trading is significantly greater in firms disclosing material weaknesses in internal control relative to firms with effective control. The positive association is present in the years leading up to the disclosure of material weaknesses, but disappears after remediation of the internal control problems… CONTINUE READING
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