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Do material weaknesses in information technology-related internal controls affect firms' 8-K filing timeliness and compliance?

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  • Holder, Anthony
  • Karim, Khondkar
  • Lin, Karen (Jingrong)
  • Pinsker, Robert

Abstract

Form 8-K reporting represents a different (and relatively unknown) information environment than annual 10-K filings. The current study takes advantage of a unique, comprehensive sample of 118,863 8-K filing event observations to investigate the association between firms' Form 8-K reporting timeliness/compliance with required reporting deadlines and their internal control weaknesses. In addition, the study investigates the association between firms' 8-K reporting and their information technology (IT) related internal control weaknesses. Overall, we find strong and robust evidence of a negative relation between the likelihood of the firm reporting a material internal control weakness and the timeliness and compliance of the firms' 8-K filings. We also find distinguishing effects of weaknesses involving IT-related controls. Given recent interest in IT-related controls and far-reaching reforms with stated objectives of improving disclosure timeliness, increasing the quality of internal controls and improving the quality of accounting information, we believe our results provide insights to accounting information systems academics, regulators, accounting standard setters and other interested observers.

Suggested Citation

  • Holder, Anthony & Karim, Khondkar & Lin, Karen (Jingrong) & Pinsker, Robert, 2016. "Do material weaknesses in information technology-related internal controls affect firms' 8-K filing timeliness and compliance?," International Journal of Accounting Information Systems, Elsevier, vol. 22(C), pages 26-43.
    • Handle: RePEc:eee:ijoais:v:22:y:2016:i:c:p:26-43
    DOI: 10.1016/j.accinf.2016.07.003
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    2. Eachempati, Prajwal & Srivastava, Praveen Ranjan & Kumar, Ajay & Tan, Kim Hua & Gupta, Shivam, 2021. "Validating the impact of accounting disclosures on stock market: A deep neural network approach," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
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    4. Niclas Hellman & Jordi Carenys & Soledad Moya Gutierrez, 2018. "Introducing More IFRS Principles of Disclosure – Will the Poor Disclosers Improve?," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 242-321, May.
    5. Chalmers, Keryn & Hay, David & Khlif, Hichem, 2019. "Internal control in accounting research: A review," Journal of Accounting Literature, Elsevier, vol. 42(C), pages 80-103.
    6. Choi, Dongjoon & Lee, Hansol & Lee, Ho-Young & Park, Hyun-Young, 2021. "The association between human resource investment in IT controls over financial reporting and investment efficiency," International Journal of Accounting Information Systems, Elsevier, vol. 43(C).
    7. Oliver Henk, 2020. "Internal control through the lens of institutional work: a systematic literature review," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(3), pages 239-273, September.
    8. Rasa Kanapickiene & Greta Keliuotyte-Staniuleniene & Deimante Teresiene, 2021. "Disclosure of Non-Current Tangible Assets Information in Private Sector Entities Financial Statements: The Case of Lithuania," Economies, MDPI, vol. 9(2), pages 1-64, May.

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