Nội dung thông tin của các thông báo về khuyết điểm kiểm soát theo Đạo luật Sarbanes–Oxley: Một cuộc điều tra thực nghiệm

Fried, Frank, Harris, Shriver and Jacobson Law Firm (2002) ‘Sarbanes–Oxley Act Adds New Corporate Responsibility and Disclosure Requirements and Creates Auditor Oversight Board’, Legal Brief to Clients, 2nd August, p. 1, available at http://www.ffhsj.com/cmemos/020802_sarb_corp_resp.pdf. Taub, S. A. (2003) ‘Speech by SEC Staff: The SEC's Internal Control Report Rules and Thoughts on the Sarbanes–Oxley Act’, May 29. Glassman, C. A. (2005) ‘Speech by SEC Commissioner’, February 22. Compliance Week, a trade publication that tracks all such disclosures in various SEC filings, reported 582 disclosures during 2004 alone. Fried, Frank, Harris, Shriver and Jacobson Law Firm, ref. 1 above. The First Roundtable. Roundtable on Implementation of Internal Control Provisions’ was held on 13th April, 2005 and the Second Roundtable ‘2006 Roundtable on Second-Year Experiences with Internal Control Reporting and Auditing Provisions’ was held on 10th May, 2006, available at http://www.sec.gov/spotlight/soxcomp.htm. See, for example a report by American Electronics Association (2005) ‘Sarbanes–Oxley Section 404: The ‘Section’ of Unintended Consequences and Its Impact on Small Business’, February. Atkins, P. S. (2005) ‘Speech by SEC Commissioner: Remarks Before the National Association of State Treasurers’, September 20. American Institute of Certified Public Accountants (AICPA) (2004) ‘AU Section 319: Consideration of Internal Control in a Financial Statement Audit’, Codification of Auditing Standards, AICPA, New York, January 1. Sarbanes–Oxley Act of 2002, Pub. L. no. 107-204, 116 Stat. 745 (2002) (codified in scattered sections of 11, 15, 18, 28, and 29 of U.S.C.). Securities and Exchange Commission (2002) ‘Final Rule: Certification of Disclosure in Companies’ Quarterly and Annual Reports’, RIN 3235-A154, and ‘ Final Rule: Management's Reports on Internal Controls over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports’, (2003) RIN 3235-A166 and 3235-A179. Thus, the mildest form of the weakness — ‘control deficiency’ is never revealed to anyone, which illustrates the importance of correct classification. Public Company Accounting Oversight Board (2004) ‘Auditing Standard 2: An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements’, PCAOB Release No. 2004-001, March 9. In response to these demands, the SEC released, for public comment, and Exposure Draft of its Interpretive Guidance on December 19, 2006. The comment period ends on February 26, 2007. Watts, R. L. and Zimmerman, J. L. (1986). Positive Accounting Theory, Prentice-Hall International, New Jersey. Healy, P. and Palepu, K. (2001) ‘Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature’, Journal of Accounting and Economics, 31 (1–3), 405–440 (see page 420 specifically). See, for example, research by Merton, R. C. (1987) ‘A simple model of capital market equilibrium with incomplete information’, The Journal of Finance, 42, 483–510; Barry, C. B. and Brown, S. J. (1985) ‘Differential information and security market equilibrium’, Journal of Financial and Quantitative Analysis, 20, 407–422; Barry, C. B. and Brown, S. J. (1986) ‘Limited information as a source of risk’, The Journal of Portfolio Management, 12, 66–72. See, for example, research by Warner, J. Watts, R. and Wruck, K. (1988) ‘Stock prices and top management changes’, Journal of Financial Economics, 20, 461–493 and Weisbach, M. (1988) ‘Outside directors and CEO turnover’, Journal of Financial Economics, 20, 431–461. See, for example, research by Aboody, D. and Kasznik, R. (2000) ‘CEO stock option awards and timing of corporate voluntary disclosures’, Journal of Accounting and Economics, 29, 73–100 and Noe, C. (1999) ‘Voluntary disclosures and insider transactions’, Journal of Accounting and Economics, 27, 305–327. Skinner, D. (1994) ‘Why firms voluntarily disclose bad news?’ Journal of Accounting Research, 32, 38–60. Francis, J., Philbrick, D. and Schipper, K. (1994) ‘Shareholder litigation and corporate disclosures’, Journal of Accounting Research, 32, 137–165. These dates were double checked with the SEC's EDGAR Filing system and accordingly adjusted for weekends and holidays. During 2002, in response to the provisions of the Sarbanes–Oxley Act of 2002, the Commission adopted new rules regarding an issuer's controls and procedures. During 2003, Item 307 was amended. Regulation S-K Item 307, as amended, requires an issuer to disclose the conclusions of the registrant's principal executive and principal financial officers, or persons performing similar functions, about the effectiveness of the registrant's disclosure controls and procedures as of the end of the period covered by the report, based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15. (PricewaterhouseCoopers, SEC Volume 2, Assurance Services 2004, SEC 6010, pages 10–11). Thus any internal control disclosures that were made for the first time prior to 2003 were excluded from our sample. These firms were: Fannie Mae, Global Crossing, Goodyear Tyre and Rubber, Lucent Technology, Nortel Networks, and WorldCom. Inclusion of these firms in our sample only makes the stock price reaction more negative and further supports our results of a significantly negative stock price reaction to internal control weakness disclosures. Since the experience of these firms does not capture the typical reaction for the average firm in our sample, it is better to focus on the results without these firms. In a descriptive study of control deficiencies of 329 firms, the companies from Semiconductor and Software & Programming industries continue to dominate in making such disclosures. See, for example, Gupta, P. P. and Leech, T. (2005) ‘Control Deficiency Reporting: Review and Analysis of Filings During 2004’, Financial Executives Research Foundation, New Jersey, 1–49. In our empirical tests, we conducted checks to see if the results are robust to dropping the high-tech group from the analyses. Our conclusions are unchanged when we omitted the high-tech firms. COMPUSTAT, a database sold by Standard & Poors, contains comprehensive financial information on all publicly listed companies in the United States. The long-term debt to total assets ratio is thus 3.6 per cent for our sample versus 5.9 per cent for the COMPUSTAT median. These results were later confirmed using the CRSP 2004 database. According to DSS, a software provider of computer programs that helps in analysing the data, a typical event study involves the following steps: (1) identifying the event of interest and defining an event window, (2) selecting a set of cases to include in the analysis, (3) predicting a ‘normal’ outcome during the event window in the absence of an event, (4) estimating the cumulative abnormal outcome within the event window, where the cumulative abnormal return is defined as the difference between the actual and predicted returns during the event window, and (5) testing whether the cumulative abnormal return is statistically different from zero. Available from http://dss.princeton.edu/online_help/analysis/event_studies.htm. Mikkelson, W. H. and Partch, M. M. (1988) ‘Withdrawn security offerings’, Journal of Financial and Quantitative Analysis, 23 (2), 119–134, Errata, 1988, 23(4), 487. Details of the statistical methodology are available upon request from the authors. Our robustness checks consist of (a) Comparison Period Methodology as utilised in the following research paper: Masulis, R. and Korwar, A. (1986) ‘Seasoned equity offerings’, Journal of Financial Economics, 15, 91–118 and (b) Raw Returns Method (ie without adjusting for market-wide movements). Also see research by Cowan, A. R. (1992) ‘Nonparametric event study tests’, Review of Quantitative Finance and Accounting2(4), 343–358 and Prabhala, N. R. (1997) ‘Conditional methods in event studies and an equilibrium justification for standard event-study procedures’, Review of Financial Studies, 10(1), 1–38. In this analysis, we use ordinary least squares regressions and White's heteroskedasticity corrected t-statistics to see if the coefficients are significant. See, for example, research by Chow, C. W. (1982) ‘The demand for external auditing: Size, debt and ownership influences’, The Accounting Review, 57, April, 272–291; Menon, K., Williams, D. D. (1994) ‘The insurance hypothesis and market prices’, The Accounting Review, 69, April, 327–342 and Lennox, C. S. (1999) ‘Audit quality and auditor size: An evaluation of the reputation and deep pockets hypotheses’, Journal of Business, Finance and Accounting, 26, September/October, 779–805. By definition a standard unqualified audit opinion is also commonly referred to as the ‘clean opinion’. It can only be issued by the external auditor only when (1) the registrant's financial statements are prepared in accordance with US generally accepted accounting principles, and (2) the audit is conducted in accordance with US generally accepted auditing standards with no scope limitation imposed on the auditor's work. In certain circumstances an auditor may issue a unqualified audit opinion that departs from the wording of a standard audit report. Auditors, typically, add an emphasis paragraph to call to readers’ attention matters such as unusually important significant events, accounting matters affecting comparability of financial statements, etc. Although SAS 59 does not require external auditors to perform specific procedures to test the going-concern assumption, the auditor must evaluate the validity of this assumption as part of its normal audit procedures. And, if in spite of these tests the auditor still believes that substantial doubt exists about the continued existence of the entity, it can modify the standard unqualified audit opinion by adding an additional paragraph to that effect. A finer breakdown of this variable was also used. Specifically, a material weakness was assigned a value of one, while the less severe ‘significant deficiency’ and ‘reportable condition’ (or ‘control deficiency’) were assigned values of 0 and −1, respectively. The qualitative results are the same as when using the original definition. We also used the natural log of the market value of equity measured five trading days before the event day as a measure of firm size in the cross-sectional regressions. The results are qualitatively similar as those for LNSALES. To the extent that large firms have more sales revenues, this result is not entirely unexpected. See, for example, research by Atiase, R. (1986) ‘Predisclosure information, firm capitalization, and security price behavior around earnings announcements’, Journal of Accounting Research, Spring, 21–36; Collins, D. W., Kothari, S. P. (1989) ‘An analysis of intertemporal and cross-sectional determinants of earnings response coefficients’, Journal of Accounting and Economics, 11, 143–181; Barclay, M. J., Smith, C. W (1995) ‘The maturity structure of corporate debt’, Journal of Finance, 50, 609-632 and Barclay, M. J., Smith, C. W. (1995) ‘The priority structure of corporate liabilities’, Journal of Finance, 50, 899–917. From a research methodology viewpoint, this correlation between BIG4 and REMACTN violates the assumptions of independence implicit in multiple regression models. To deal with this methodological issue, we created an interaction variable, INTERACN, which is the product of the two variables, BIG4 and REMACTN and used this new variable in the regression. The results for this regression are shown in the second row of Table VI. In the presence of the interaction variable, the BIG4 variable is not significantly related to the abnormal return, whereas the INTERACN variable is highly significant. See, for example, research by DeAngelo, L. E. (1981) ‘Auditor size and audit quality’, Journal of Accounting and Economics, 3 (December), 183–199 and Hay, D., Davis, D. (2004), ‘The voluntary choice of an auditor of any level of quality’, Auditing: A Journal of Practice & Theory, 23(2), September, 37–53. Gupta and Leech, ref. 23 above. American Institute of Certified Public Accountants (AICPA) (2004) ‘AU Section 325: Communication of Internal Control Related Matters Noted in an Audit’, Codification of Auditing Standards, AICPA, New York, January 1. Ashbaugh-Skaife, H., Collins, D. W., Kinney Jr., W. R. and LaFond, R. (2006) ‘The effect of internal control deficiencies on firm risk and cost of equity capital’, Working Paper. Available at SSRN:http://ssrn.com/abstract=896760. Beneish, M. D., Billings, M. B. and Hodder, L. D. (2006) ‘Internal control weaknesses and information uncertainty’, Working Paper. Available at SSRN:http://ssrn.com/abstract=896192. Moody's Investor Service (2004) ‘Section 404 Reports on Internal Control: Impact on Ratings will depend on Nature of Material Weakness Reported’, Moody's Special Comment, October. Standard & Poor's (2004) ‘Credit Policy Update: Sarbanes–Oxley Section 404, and Standard & Poor's Approach to Evaluating Control Deficiencies’, November 22. Fitch Ratings (2005) ‘Sarbanes–Oxley Section 404: Fitch's Approach to Evaluating Management and Auditor Assessments of Internal Controls’, Special Report, January 19.