Purpose This paper aims to determine whether there is a relationship between intellectual capital and social capital and internal control weaknesses and assess the relationship between the variables of intellectual capital and social capital and internal control weaknesses. Design/methodology/approach The statistical population consists of 1,309 firm-year observations from 2014 to 2020. The research hypothesis is tested using statistical methods, including multivariate, least-squares and fixed-effects regression. Findings The results demonstrate a negative and significant relationship between intellectual capital, social capital and internal control weaknesses. The study also finds that increased intellectual and social capital quality improves human resource utilization, control mechanism, creativity and firm performance. The results also show that intellectual capital and social capital enhancement will reduce internal control weaknesses in the upcoming years. Originality/value This paper is the pioneer study on the relationship between intellectual capital and social capital and internal control weaknesses in Iran, carried out separately and in exploratory factor analysis. This paper considers intellectual capital components for theoretical factor analysis, including human capital, structural capital and customer capital. Internal control weakness is assessed based on financial, non-financial and information technology (IT) weaknesses.

Purpose This study aims to assess the relationship between managerial entrenchment and the chance of fraud in financial statements, which are the only available source for shareholders’ decisions, so their accuracy and reliability are of great importance. Hence, the realization of contributing factors to preventing financial information distortion is vital. Moreover, managerial entrenchment on the chance of fraud in the company’s upcoming years has also been analyzed. Design/methodology/approach The factor analysis of five variables [chief executive officer (CEO) duality, managerial ownership, board independence, board compensation and CEO tenure] is used for management entrenchment. To examine the hypothesis testing, multivariate regressions, feasible general least squares regression and Logit model regression are used. The statistical sample under study in this paper includes 1,122 year-company observations during 2013–2018 and Beneish’s (1999) model is used for evaluating fraud. Findings The study results show a negative and significant relationship between management entrenchment and the chance of fraud in financial statements. That means managers with a higher degree of managerial entrenchment are more likely to create value and acquire wealth for the firm, and that causes them not to waste and waste the firm resources through enhancing the supervisory mechanisms. Moreover, the study results also show that improving and strengthening management entrenchment will lower the upcoming years’ fraud condition. Originality/value The current paper is the first time that the relationship between managerial entrenchment and financial statement fraud is assessed within a study. The results of the paper help the beneficiaries and shareholders realize different aspects of management entrenchment. That means managers’ power and authority can be used to make shareholders’ interests, but they can hinder misuse and fraud.