Internal control material weakness opinions and the market's reaction to securities fraud litigation announcements

Yu Cheng Tsai, Hua Wei Huang

Research output: Contribution to journalArticlepeer-review

Abstract

Using 465 firm-year observations of publicly litigated firms in the U.S. from 2000 to 2018, this study finds that declines in stock price on securities fraud litigation announcement dates are significantly more severe for publicly litigated firms receiving U.S. SOX 404 internal control material weakness (ICMW) opinions. Also, the stock price declines are more prominent for publicly litigated firms with entity-level ICMW than for those with account-level ICMW. The aforementioned findings show that ICMW opinions have predictive value for public investors and capital market participants.

Original languageEnglish
Article number101833
JournalFinance Research Letters
DOIs
Publication statusAccepted/In press - 2020

All Science Journal Classification (ASJC) codes

  • Finance

Fingerprint Dive into the research topics of 'Internal control material weakness opinions and the market's reaction to securities fraud litigation announcements'. Together they form a unique fingerprint.

Cite this