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沙賓法
404
條及審計準則第
5
號是否會減少內部控制揭露錯誤？
268
Prior studies indicate that the existence of internal control deficiencies is associated
with company size, operating loss, business risk, company growth, the appointment of a
Big-4 auditor, restructuring charges, and the incidence of foreign transactions (Ge and
McVay, 2005; Ashbaugh-Skaife et al., 2007; Doyle, Ge, and McVay, 2007b). Also
consistent with prior studies, we control for companies size with natural log of total assets
(
SIZE
) and market capitalization (
MARKETCAP
). We proxy operating loss with return on
assets (
ROA
) and aggregate loss (
AGLOSS
). We proxy business risk with leverage (
LEV
).
Company growth is controlled with price-to-earnings (
PE
) and market-to-book (MB)
ratios. The appointment of a Big-4 auditor (
BIGN
), restructuring charges (
RCP
), and the
incidence of foreign transactions (
FT
) are also controlled in our models.
YEAR
is a set of
dummy variables separately representing each of the fiscal years. Finally, we include a set
of 13 industry-indicator variables (
INDUSTRY
) based on Frankel, Johnson, and Nelson
(2002). To mitigate the effect of extreme values, we winsorize all of the continuous
variables at the 0.01 and 0.99 percentiles. Table 2 shows our variable definitions.
Table 2 Variable Definitions
EFFECTIVE
=
dummy variable coded 1 if a company concludes that its internal-
controlinternal control system is effective in its 10-K filing and 0 otherwise
SOX404
=
dummy variable with a value of 1 if a company is subject to the SOX 404
regulation and 0 otherwise
AS5
= dummy variable coded 1 if AS5 is applicable to a company and 0 otherwise
SIZE
= natural log of total assets in the unit of million dollars
ROA
= net income before extraordinary items divided by total assets
LEV
= total liabilities divided by total assets
PE
= year-end share price divided by earnings per share
MB
= year-end market value divided by book value
BIGN
= dummy variable coded 1 if the appointed auditor is a - auditor and 0 otherwise
RCP
= aggregate restructuring charges
FT
=
indicator variable coded 1 if a company has a non-zero foreign currency
translation and 0 otherwise
AGLOSS
=
dummy variable coded 1 if earnings before extraordinary items in years
t
and
t
-1 sum to less than zero and 0 otherwise
MARKETCAP
= natural log of share price multiplied by number of outstanding shares
YEAR
= a set of year dummy variables
INDUSTRY
= a set of 13 industry-indicator variables based on Frankel et al. (2002)