1,721,041 research outputs found
Related Party Transactions, firm value and the effectiveness of the Dutch corporate governance code
No full textThe aim of this research is to investigate whether there is a relation between the amount of Related Party Transactions (RPTs), firm value and some firm characteristics. Since RPTs are associated with a risk of expropriation of firms´ resources / fraudulent practising, there may be a negative relation between the amount of RPTs and firm value. This negative relation is already proved by the studies of Cheung et al. (2006), Kolbeck and Mayhew (2010) and Nekhili and Cherif (2011). A high disclosure level might mitigate the negative effect of RPTs on firm value. This study investigated the relation between the amount of RPTs, disclosure level in the field of RPTs and firm value. No significant impact on firm value was found for both the amount of RPTs as disclosure level for the years 2003 as well as 2009. Furthermore, this research investigated which corporate governance and ownership characteristics had a significant impact on the amount of RPTs. A significant positive impact was found for the percentage of ordinary shares of the main shareholder on the amount of RPTs using a ‘normal’ regression, but only for the year 2009. With the panel regression, a significant positive relation was found between being listed in the USA and the amount of RPTs. This positive relation was the reverse of the expected effect. The final part of this research was devoted to the impact of the Dutch corporate governance code on the protection of minority shareholders. No significant decrease of the amount of RPTs was found between the year 2003 and 2009. Also no significant increase was found of disclosure level. Furthermore, the effect (coefficient) of the amount of RPTs and disclosure level on firm value did not decreased respectively increased significantly over time
The Influence of Industry Differences and Restructuring on the Disclosed IT Control Weaknesses under SOX Section 404 in US based companies
No full textThis research study investigates the impact of industry differences and restructuring on the IT control quality, as measured by the existence of material IT control weaknesses. The growing importance of IT controls is highlighted by the Sarbanes Oxley Act (2002), which requires management and auditors to report on the effectiveness of internal controls, including IT controls.
The investigation of IT control quality in this study is relevant, because it may help auditors to determine which industries/ circumstances need extra attention to identify IT control weaknesses. Investors and management may also use these research results to assess whether a company is more likely to have IT control weaknesses.
The results reveal that industry differences are significantly and positively associated with firms disclosing material IT control weaknesses under SOX section 404 in the years 2004-2011. Industry differences are partly based on the complexity of financial reporting. The research study results support the hypothesis that technology, health care and financial services industries (having more fraud opportunities) are more likely to have material IT control weaknesses. Other industry differences, based on the competitiveness level, are also significant and support the hypothesis that non-competitive industries have more material IT control weaknesses.
This study also highlights the effect of restructuring on material IT control weaknesses. Three measures are used to analyze this and the results indicate that only the existence of a restructuring in the sample period is significant and supports the hypothesis. The existence of a restructuring and the amount of the restructuring costs in the same year as the IT material weakness are highly inter-related, causing a possible bias in the analysis. The correlations of these variables also have a negative sign for the coefficient and therefore do not support the hypothesis.
An additional analysis of the trend of the material IT control weaknesses shows a downward trend from the year 2007. A surprising finding is that the year 2007 shows relatively more material IT control weaknesses than other years, while the total number of material weaknesses remained the same.
Finally in the discussion the limitations of this study and recommendations for further research are considered
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