Identifying Unintentional Error in Restatement Disclosures

Hayes, B. Louise

doi:10.2139/ssrn.2269086

Cited by 4 publications

(1 citation statement)

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“…Hennes et al (2008) and Plumlee and Yohn (2010) suggest that financial restatements are mostly attributed to basic accounting or data errors, for example, counting and pricing errors. Hayes (2014) suggests that financial restatements caused by unintentional errors reveal that firms lack accurate records and that their information systems are poorly designed, thus affecting the information used by managers to make decisions. We employ the absence of financial restatements due to unintentional errors ( ABSENT ) as the second measure of IIQ.…”

Section: Methodsmentioning

confidence: 99%

Does internal information quality impact corporate cash holdings? Evidence from China

Xiong

Zheng

et al. 2020

Accounting & Finance

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This paper examines the impact of internal information quality (IIQ) on corporate cash holdings in China. Employing two widely used IIQ measures (i.e., the earnings announcement speed and the absence of financial restatements), we show a significant and negative association between IIQ and corporate cash holdings. This negative relation is concentrated among complex firms (i.e., firms with more business segments), non-state-owned firms, and firms with poor corporate governance. Our findings are valid after we consider endogeneity issues. This paper suggests that the quality of the internal information environment plays an important role in influencing firms' cash holding decisions.

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Section: Methodsmentioning

confidence: 99%

Does internal information quality impact corporate cash holdings? Evidence from China

Xiong

Zheng

et al. 2020

Accounting & Finance

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The importance of the internal information environment for tax avoidance

Gallemore

Labro²

2015

Journal of Accounting and Economics

454

151

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We show that firms' ability to avoid taxes is greatly affected by the quality of the firm's internal information environment, with effective tax rates (ETRs) substantially lower for high internal information quality firms. Furthermore, we show that firms that experience an internal information quality improvement (reduction) are reducing (increasing) their ETRs. The effect of internal information quality on tax avoidance is strongest for firms in which information is likely to play a more important role. First, firms with high coordination needs because of their dispersed geographical or business industry presence benefit more from the reduced information asymmetry and improved information coordination between their various business units, allowing for more effective tax planning. Second, firms that are operating in a more uncertain environment are able to offset some of the negative effect of uncertainty on their ETRs through the quality of their internal information system. Because lower ETRs are obtained through better internal information quality, they do not come at the cost of increased risk in the tax positions taken: unrecognized tax benefits and ETR volatility are lower in high quality information environments.

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