The Effect of SOX Internal Control Deficiencies on Firm Risk and Cost of Equity

@article{AshbaughSkaife2009TheEO,
  title={The Effect of SOX Internal Control Deficiencies on Firm Risk and Cost of Equity},
  author={H. Ashbaugh-Skaife and D. Collins and W. Kinney and R. Lafond},
  journal={Journal of Accounting Research},
  year={2009},
  volume={47},
  pages={1-43}
}
  • H. Ashbaugh-Skaife, D. Collins, +1 author R. Lafond
  • Published 2009
  • Business
  • Journal of Accounting Research
  • ABSTRACT The Sarbanes-Oxley Act (SOX) mandates management evaluation and independent audits of internal control effectiveness. The mandate is costly to firms but may yield benefits through lower information risk that translates into lower cost of equity. We use unaudited pre-SOX 404 disclosures and SOX 404 audit opinions to assess how changes in internal control quality affect firm risk and cost of equity. After controlling for other risk factors, we find that firms with internal control… CONTINUE READING
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