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DOES EMERGING GROWTH COMPANY INVESTOR SKEPTICISM DISSIPATE BEFORE THE FIRST REPORTED INDEPENDENT INTERNAL CONTROL AUDIT RESULTS? AN EMPIRICAL INVESTIGATION

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Date Issued:
2023
Abstract/Description:
This study examines whether emerging growth company (EGC) investors respond to the annual required internal control disclosures over financial reporting (ICFR). I develop three hypotheses to test across the EGC lifecycle. Specifically, I investigate whether the first year ICFR disclosure, the remediation of a previously reported material weakness ICFR disclosure and the EGC exit are associated with the firm’s cumulative abnormal return over a three-day event window. Prior literature has observed that ICFR disclosures by management and the ICFR audit opinion can be shown to be informative to investors. However, I am not aware of any study investigating whether the EGC investors respond to this type of information. I find that the reported ICFR disclosures are not associated with cumulative abnormal returns during their initial ICFR report disclosure or upon exit as informative but do respond to the reporting of material weakness remediation.
Title: DOES EMERGING GROWTH COMPANY INVESTOR SKEPTICISM DISSIPATE BEFORE THE FIRST REPORTED INDEPENDENT INTERNAL CONTROL AUDIT RESULTS? AN EMPIRICAL INVESTIGATION.
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Name(s): Burke, Lawrence S. , author
Kohlbeck, Mark, Thesis advisor
Florida Atlantic University, Degree grantor
School of Accounting
College of Business
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Created: 2023
Date Issued: 2023
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 84 p.
Language(s): English
Abstract/Description: This study examines whether emerging growth company (EGC) investors respond to the annual required internal control disclosures over financial reporting (ICFR). I develop three hypotheses to test across the EGC lifecycle. Specifically, I investigate whether the first year ICFR disclosure, the remediation of a previously reported material weakness ICFR disclosure and the EGC exit are associated with the firm’s cumulative abnormal return over a three-day event window. Prior literature has observed that ICFR disclosures by management and the ICFR audit opinion can be shown to be informative to investors. However, I am not aware of any study investigating whether the EGC investors respond to this type of information. I find that the reported ICFR disclosures are not associated with cumulative abnormal returns during their initial ICFR report disclosure or upon exit as informative but do respond to the reporting of material weakness remediation.
Identifier: FA00014246 (IID)
Degree granted: Dissertation (PhD)--Florida Atlantic University, 2023.
Collection: FAU Electronic Theses and Dissertations Collection
Note(s): Includes bibliography.
Subject(s): Financial statements
Accounting
Persistent Link to This Record: http://purl.flvc.org/fau/fd/FA00014246
Use and Reproduction: Copyright © is held by the author with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Host Institution: FAU