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- Publisher Website: 10.2308/accr-52078
- Scopus: eid_2-s2.0-85064275945
- WOS: WOS:000461030600006
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Article: Accounting manipulation, peer pressure, and internal control
Title | Accounting manipulation, peer pressure, and internal control |
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Authors | |
Keywords | SOX Peer pressure Accounting manipulation Internal controls |
Issue Date | 2019 |
Citation | Accounting Review, 2019, v. 94, n. 1, p. 127-151 How to Cite? |
Abstract | © 2019 American Accounting Association. All Rights Reserved. We study firms’ investment in internal controls to reduce accounting manipulation. We first show that peer managers’ manipulation decisions are strategic complements: one manager manipulates more if he believes that reports of peer firms are more likely to be manipulated. As a result, one firm’s investment in internal controls has a positive externality on peer firms. It reduces its own manager’s manipulation, which, in turn, mitigates the manipulation pressure on managers at peer firms. Firms do not internalize this positive externality and, thus, underinvest in their internal controls over financial reporting. The problem of underinvestment provides one justification for regulatory intervention in firms’ internal controls choices. |
Persistent Identifier | http://hdl.handle.net/10722/285835 |
ISSN | 2023 Impact Factor: 4.4 2023 SCImago Journal Rankings: 4.640 |
SSRN | |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Gao, Pingyang | - |
dc.contributor.author | Zhang, Gaoqing | - |
dc.date.accessioned | 2020-08-18T04:56:46Z | - |
dc.date.available | 2020-08-18T04:56:46Z | - |
dc.date.issued | 2019 | - |
dc.identifier.citation | Accounting Review, 2019, v. 94, n. 1, p. 127-151 | - |
dc.identifier.issn | 0001-4826 | - |
dc.identifier.uri | http://hdl.handle.net/10722/285835 | - |
dc.description.abstract | © 2019 American Accounting Association. All Rights Reserved. We study firms’ investment in internal controls to reduce accounting manipulation. We first show that peer managers’ manipulation decisions are strategic complements: one manager manipulates more if he believes that reports of peer firms are more likely to be manipulated. As a result, one firm’s investment in internal controls has a positive externality on peer firms. It reduces its own manager’s manipulation, which, in turn, mitigates the manipulation pressure on managers at peer firms. Firms do not internalize this positive externality and, thus, underinvest in their internal controls over financial reporting. The problem of underinvestment provides one justification for regulatory intervention in firms’ internal controls choices. | - |
dc.language | eng | - |
dc.relation.ispartof | Accounting Review | - |
dc.subject | SOX | - |
dc.subject | Peer pressure | - |
dc.subject | Accounting manipulation | - |
dc.subject | Internal controls | - |
dc.title | Accounting manipulation, peer pressure, and internal control | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.2308/accr-52078 | - |
dc.identifier.scopus | eid_2-s2.0-85064275945 | - |
dc.identifier.volume | 94 | - |
dc.identifier.issue | 1 | - |
dc.identifier.spage | 127 | - |
dc.identifier.epage | 151 | - |
dc.identifier.isi | WOS:000461030600006 | - |
dc.identifier.ssrn | 2767829 | - |
dc.identifier.issnl | 0001-4826 | - |