Purpose The purpose of this paper is to investigate investor reactions to financial restatements conditional on disclosures of internal control weaknesses under Section 404 of the Sarbanes-Oxley Act. Design/methodology/approach The research uses cumulative abnormal stock returns (CARs) as a proxy for investor reactions. Restatements and internal control reports are available on audit analytics. Multivariate regression analyses were used for testing. Findings Using a sample of restating firms whose original misstatements are linked to underlying internal control weaknesses, the research finds that cumulative abnormal returns for firms disclosing internal control weaknesses in a timely manner is negative in a three-day window around the restatement announcements. The finding indicates that restatements with early disclosure of internal control weaknesses provide more persuasive evidence of the ineffectiveness of a firm’s internal control over financial reporting, rather than early disclosure lowering the information asymmetry between a firm and investors. Research limitations/implications This study employs CARs to examine the market reaction to restatements conditional on disclosure of internal control weaknesses. Practical implications Further study on reactions by creditors who have access to private information on firms could extend the implications of the finding. Originality/value The study contributes to the existing research by documenting that early disclosure of material weaknesses in internal control affects investors’ reactions to financial restatements.

Background: While asthma control is defined as the extent to which the various manifestations of asthma are reduced by treatment, current guidelines of asthma recommend assessment of asthma control without consideration of airway inflammation. Our aim was to investigate the relationships between fractional exhaled nitric oxide (FeNO), a reliable marker of airway inflammation, and levels of asthma control in patients treated with inhaled corticosteroids (ICS). Methods: We enrolled 71 adult patients with asthma who had been treated with ICS for more than four months. FeNO was measured and spirometry was performed at the time of enrollment. Asthma control was assessed (a) by the physician based on the Global Initiative for Asthma guidelines, (b) by the patients, and (c) by using the Asthma Control Test (ACT). Statistical analyses were done to analyze the relationships between (i) FeNO and (ii) measures of asthma control and clinical indices for asthma manifestations. Results: There was no significant difference in FeNO levels between the three groups according to levels of asthma control (controlled, partly controlled and uncontrolled) as determined by the physician (p=0.81), or by the patients (p=0.81). In addition, FeNO values were not significantly correlated with the ACT scores (r=0.031, p=0.807), while FeNO showed a correlation with peripheral blood eosinophil counts (p＜0.001).Conclusion: These findings demonstrate that FeNO levels are not associated with measures of asthma control in patients treated with ICS. Information on airway inflammation from FeNO concentrations seems to be unrelated to levels of asthma control.

This study examines the effect of capitalizing acquired in‐process research and development (IPR&D) on information asymmetry under Statement of Financial Accounting Standards No. 141 (R) (SFAS 141R). SFAS 141R requires acquirers to fully recognize IPR&D at fair value as an indefinite‐lived intangible asset until completion or discontinuation of the project. Prior research suggests IPR&D capitalization will result in an improvement in the information environment. In contrast, we find no evidence that capitalizing IPR&D improved the information environment for IPR&D acquirers. Instead, most of our results suggest no significant change in information asymmetry for IPR&D acquirers during the post‐SFAS 141R period, relative to the concurrent changes for non‐IPR&D acquirers. In cases in which the results suggest a statistically significant increase, the economic magnitudes are relatively small. In addition, we find no evidence that IPR&D acquirers engaged in increased classification shifting between IPR&D and goodwill during the post‐SFAS 141R period, as critics of capitalization had feared.

No abstract

No abstract