The effect of external audits of internal control over financial reporting on financial reporting for clients of Big 4, Second-tier,and small audit firms

The external audit of internal control over financial reporting (ICFR) is a very expensive and contentious aspect of the Sarbanes–Oxley Act (SOX). Larger public firms were first required to file a management report on and have an external audit of ICFR in 2004. Smaller public firms were first required to file a management report on ICFR in 2007 but are exempt from the audit requirement. Whereas most related prior research investigates the combined effect of management and auditor reports on financial reporting, this study examines the distinct effect of auditor reports on reporting quality. For companies audited by small auditors, we find evidence that financial reporting quality improves with an auditor report on ICFR. We find no evidence that auditor ICFR reports improve reporting quality for clients of Big 4 or Second-tier audit firms. Our study adds to the debate on the applicability of SOX Section 404 to smaller firms.     

Do management reports on internal control over financial reporting improve financial reporting?

Sections 404a and 404b of the Sarbanes–Oxley Act require management and external auditors, respectively, to report on the adequacy of a company’s internal control over financial reporting (ICFR). Larger public firms were first required to file a management report and have an external audit of ICFR in 2004. Smaller public firms were first required to file a management report on ICFR in 2007 but are exempt from the attestation requirement. We investigate the distinct effect of management reports on financial reporting quality. We find that management reports on ICFR improve reporting quality and demonstrate that there are financial reporting benefits from the management report requirement on its own without attestation.     

‘It’s a Harsh Fact of Life with the RMA’: neo-liberalism and the realities of community sports facility development by the private sector in New Zealand

Despite the importance of facilities as primary sites for delivery of leisure and sport services, there has been a scarcity of academic literature on the provision of community sports facilities and the processes through which they are developed. In particular, this paper provides empirical analysis of leisure facility provision with a focus on practice and experience of policy and planning actors. By employing a case study approach and semi-structured interviews, the study identified a sharp contrast between the discourse of neo-liberalism and the realities of a highly regulated environment for the private sector under a national legislation of New Zealand, namely the Resource Management Act 1991. While both public and private actors recognised benefits of the resource consent process in mitigating the negative environmental impacts and facilitating public input, the findings also revealed its potential impediments to both private and philanthropic developments and their potential resultant benefits to communities and social citizenship due to its costly, restrictive and undifferentiated nature. Consequently, the paper suggests that future research needs to examine empirical evidence of how social citizenship and citizen engagement are enhanced by both public and private sectors through planning and development of community sports facilities and services.     

Market reactions to the disclosure of internal control weaknesses and to the characteristics of those weaknesses under section 302 of the Sarbanes Oxley Act of 2002

We examine the stock price reaction to management’s disclosure of internal control weaknesses under §302 of the Sarbanes Oxley Act and to the characteristics of these weaknesses, controlling for other material announcements in the event window. We find that some characteristics of the weaknesses—their severity, management’s conclusion regarding the effectiveness of the controls, their auditability, and the vagueness of the disclosures—are informative. We also find that the information content of internal control weakness disclosures depends on the severity of the internal control weakness. Moreover, in a sub-sample uncontaminated by other announcements in the event window, we find negative price reactions to the disclosure of internal control weaknesses and material weaknesses.

美国联邦政府单一审计制度及其借鉴意义

单一审计制度是美国联邦政府的一项重要审计制度。《单一审计法》对美国联邦政府转移支付审计制度进行了详细的规定。本文介绍了单一审计制度,同时结合我国转移支付审计的实际情况,提出了我国在转移支付审计方面应注意的问题,以及如何进一步改进的建议。     

New development: Local government ethics in England: how is local ownership working?

With the abolition of the Audit Commission and the Standards Board for England, and the emphasis in the Localism Act 2011 on local ownership in England for standards, research was undertaken into a group of councils to assess their legislative compliance arrangements and the development of organizational ethical cultures. The research argues that the delivery of the former is a work-in-progress and that there is little evidence of the latter.     

Sarbanes–Oxley Act and patterns in stock returns around executive stock option exercise disclosures

We document negative stock returns and elevated trading volumes around executives’ early option exercise disclosures post‐SOX, but not pre‐SOX. This stock price reaction is incomplete, and the negative stock price drift is smaller post‐SOX compared to pre‐SOX. We also show effects of media coverage in the stock price response to exercise disclosures in the post‐SOX period. These findings provide evidence that the requirement mandated by SOX to disclose executives’ stock option exercises within two business days, and the increased media coverage, improves investors’ ability to incorporate into stock prices in a timely fashion the information conveyed by these exercises.     

英国《气候变化法》的出台及其减排路线图

2008年11月26日英国《气候变化法》最终经女王批准形成法律,使英国成为世界上第一个将温室气体减排目标以法律形式确定下来的国家。论述了该法出台的过程、主要内容及其出台的背后原因,并分析出英国未来减排的路线图。这些结论对我国未来对气候变化有很好的参考价值。     

美国《复苏与再投资法案》关于铁路投资监管的规定对我国的启示

研究了美国《复苏与再投资法案》关于铁路投资监管的规定中,在铁路投资监管的主体、监管的形式和内容等方面值得借鉴之处,分析总结出中国经济刺激政策实施过程中对铁路投资监管的相应不足之处,结合我国的有关法律和实际情况,提出完善我国铁路投资监管的法律建议,即:在主体方面,应该进一步明确新增中央投资协调小组的职能、权力和运行机制,增加全国人大及其常委会作为铁路投资日常监管的主体,完善媒体和公众监督;在形式和内容方面,在事前监管和事中监管方面予以完善,并且增加新增中央投资协调小组的建议权。     

Do Piketty and Saez Misstate Income Inequality? Critiquing the Critiques

A large body of literature points to sharply growing income inequality over the past half century. The Piketty and Saez dataset that measures income distribution provides empirical support for this claim. Our article evaluates three prominent criticisms of this dataset as well as the responses of Piketty and Saez to these criticisms. One key argument against using their dataset is that Piketty and Saez do not control for income shifting by top income earners in response to the Tax Reform Act of 1986 (TRA86) and thus overstate income inequality. In evaluating this criticism we find that a segment of their dataset likely understates income inequality; this is just the opposite of what critics assert. This implies that the Piketty–Saez dataset is a valuable resource for income inequality research and that scholars can use it to build more refined, accurate and insightful measures of income inequality.