Publication Type
Journal Article
Version
publishedVersion
Publication Date
9-2013
Abstract
This paper investigates the value relevance of accounting information in the presence of ineffective internal control (IIC). Based on Ohlson's valuation model, this paper first documents that IIC can directly affect a firm's market value after control cost of capital, corporate governance, and other, value-relevant variables. Second, this paper finds that the value relevance of earnings and book value in determining a firm's market value are significantly reduced. Collectively, the results of this paper indicate that the effectiveness of internal controls can directly affect a firm's market value and the value relevance of accounting information.
Keywords
ineffective internal control, book value, earnings, value relevance, market value
Discipline
Accounting | Databases and Information Systems
Research Areas
Information Systems and Management
Publication
Asia-Pacific Journal of Accounting & Economics
Volume
20
Issue
3
First Page
334
Last Page
347
ISSN
1608-1625
Identifier
10.1080/16081625.2013.765026
Publisher
Routledge
Citation
HU, Nan; QI, Baolei; TIAN, Gaoliang; YAO, Lee; and ZENG, Zhen.
The impact of ineffective internal control on the value relevance of accounting information. (2013). Asia-Pacific Journal of Accounting & Economics. 20, (3), 334-347.
Available at: https://ink.library.smu.edu.sg/sis_research/8019
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1080/16081625.2013.765026