Internal control effectiveness, textual risk disclosure, and their usefulness: US evidence
M Elsayed, T Elshandidy - Advances in accounting, 2021 - Elsevier
This paper investigates the impact of internal control effectiveness (ICE) on the level of
textual risk disclosure (TRD; including aggregate risk disclosure and its tone of good news
and bad news about risk). Our findings suggest that firms with an ineffective internal control
system exhibit significantly lower levels of TRD than firms with effective internal controls.
Besides, we show a significant change in TRD behavior provided by managers of firms with
recurrent ineffective internal controls. Pursuant to agency theory, this behavior change is …
textual risk disclosure (TRD; including aggregate risk disclosure and its tone of good news
and bad news about risk). Our findings suggest that firms with an ineffective internal control
system exhibit significantly lower levels of TRD than firms with effective internal controls.
Besides, we show a significant change in TRD behavior provided by managers of firms with
recurrent ineffective internal controls. Pursuant to agency theory, this behavior change is …
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