Explained variables (Audit Quality proxies)
|
JonesMod |
Discretionary Accruals |
NA |
Discretionary Accruals estimated by the modified Jones model (Dechow et al., 1995Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. The Accounting Review, 70(2), 193-225.). |
Dechow et al. (1995Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. The Accounting Review, 70(2), 193-225.) |
Reapr |
Financial Restatements |
NA |
Dummy variable that takes the value 1 when the company resubmitted the financial statement for quantitative reasons, 0 when not. |
Li et al. (2018Li, Y., Park, Y., & Wynn, J. (2018). Investor reactions to restatements conditional on disclosure of internal control weaknesses. Journal of Applied Accounting Research, 19(3), 423-439. https://doi.org/10.1108/JAAR-10-2017-0107 https://doi.org/10.1108/JAAR-10-2017-010...
) |
AuditDelay |
Audit Delay |
NA |
Logarithm of the difference (in days) between the end date of the fiscal year and the date of issue of the auditor’s report. |
Bailey et al. (2018Bailey, C., Collins, D. L., & Abbott, L. J. (2018). The impact of enterprise risk management on the audit process: Evidence from audit fees and audit delay. Auditing: A Journal of Practice & Theory, 37(3), 25-46. https://doi.org/10.2308/ajpt-51900 https://doi.org/10.2308/ajpt-51900...
) Pizzini et al. (2015Pizzini, M., Lin, S., & Ziegenfuss, D. E. (2015). The impact of internal audit function quality and contribution on audit delay. Auditing: A Journal of Practice & Theory, 34(1), 25-58. https://doi.org/10.2308/ajpt-50848 https://doi.org/10.2308/ajpt-50848...
) |
ASP |
Administrative Sanctioning Procedure |
NA |
Dummy variable that takes value 1 when the company has been involved in a ASP, 0 when not. |
Guerra et al. (2020Guerra, R. B., Marques, V. A., & Martins, V. G. (2020, dezembro). O que eu fiz contra o mercado de capitais? Uma análise dos processos sancionadores julgados pela CVM no período de 2007-2018. In 14oCongresso ANPCONT, Foz do Iguaçu, PR. ) |
Explanatory variables of interest (internal control weaknesses)
|
QtdeDCI |
Internal Control Weaknesses |
( + ) |
Total ICDs reported in the i-th company, in year t. |
Doyle et al. (2007Doyle, J. T., Ge, W., & McVay, S. (2007). Accruals quality and internal control over financial reporting. The Accounting Review, 82(5), 1141-1170. https://doi.org/10.2308/accr.2007.82.5.1141 https://doi.org/10.2308/accr.2007.82.5.1...
) Foster & Shastri (2012Foster, B. P., & Shastri, T. (2012). Material internal control weaknesses and earnings management in the post-SOX environment. Journal of Applied Business Research (JABR), 29(1), 183. https://doi.org/10.19030/jabr.v29i1.7566 https://doi.org/10.19030/jabr.v29i1.7566...
) Lenard et al. (2016Lenard, M. J., Petruska, K. A., Alam, P., & Yu, B. (2016). Internal control weaknesses and evidence of real activities manipulation. Advances in Accounting, 33, 47-58. https://doi.org/10.1016/j.adiac.2016.04.008 https://doi.org/10.1016/j.adiac.2016.04....
) |
Explanatory control variables
|
RemVar |
Variable Compensation of the Executive Board |
( - ) |
Natural logarithm of the total variable compensation paid to the board of directors. |
Lenard et al. (2016Lenard, M. J., Petruska, K. A., Alam, P., & Yu, B. (2016). Internal control weaknesses and evidence of real activities manipulation. Advances in Accounting, 33, 47-58. https://doi.org/10.1016/j.adiac.2016.04.008 https://doi.org/10.1016/j.adiac.2016.04....
) |
BenPosEmpr |
Post-Employment Benefit |
( - ) |
Natural logarithm of post-employment benefits paid to the executive board. |
Lenard et al. (2016Lenard, M. J., Petruska, K. A., Alam, P., & Yu, B. (2016). Internal control weaknesses and evidence of real activities manipulation. Advances in Accounting, 33, 47-58. https://doi.org/10.1016/j.adiac.2016.04.008 https://doi.org/10.1016/j.adiac.2016.04....
) |
NivEnd |
Short-Term Indebtedness Level |
( + ) |
Total liabilities divided by total assets. |
Amoah et al. (2017Amoah, N. Y., Anderson, A., Bonaparte, I., & Tang, A. P. (2017). Internal control material weakness and real earnings management. In C. R. Lehman(Ed.), Parables, myths and risks (Vol. 20, pp. 1-21). Emerald. ) Marques et al. (2016) |
HonAud |
Audit Fee |
( + ) |
Natural logarithm of total audit fees. |
Amoah et al. (2017Amoah, N. Y., Anderson, A., Bonaparte, I., & Tang, A. P. (2017). Internal control material weakness and real earnings management. In C. R. Lehman(Ed.), Parables, myths and risks (Vol. 20, pp. 1-21). Emerald. ) |
Tam |
Size |
( + ) |
Natural logarithm of total assets. |
Amoah et al. (2017Amoah, N. Y., Anderson, A., Bonaparte, I., & Tang, A. P. (2017). Internal control material weakness and real earnings management. In C. R. Lehman(Ed.), Parables, myths and risks (Vol. 20, pp. 1-21). Emerald. ) |
ROA |
Return on Assets |
( + ) |
Earnings before taxes on total assets. |
Amoah et al. (2017Amoah, N. Y., Anderson, A., Bonaparte, I., & Tang, A. P. (2017). Internal control material weakness and real earnings management. In C. R. Lehman(Ed.), Parables, myths and risks (Vol. 20, pp. 1-21). Emerald. ) |
MTB |
Market-to-Book |
( + ) |
Market value of stocks divided by Equity. |
Amoah et al. (2017Amoah, N. Y., Anderson, A., Bonaparte, I., & Tang, A. P. (2017). Internal control material weakness and real earnings management. In C. R. Lehman(Ed.), Parables, myths and risks (Vol. 20, pp. 1-21). Emerald. ) |
DECL |
Decline Lifecycle Stage |
(+/-) |
Dummy variable that takes value 1 for the Decline stage according to the Dickinson model, 0 for the others. |
Krishnan et al. (2020Krishnan, G. V., Myllymäki, E., & Nagar, N. (2020). Does financial reporting quality vary across firm life cycle? Journal of Business Finance & Accounting, 48(5-6), 954-987. https://doi.org/10.1111/jbfa.12508 https://doi.org/10.1111/jbfa.12508...
) |
Big4 |
Big 4 |
( + ) |
Dummy variable that takes value 1 when the auditor is Deloitte, Ernest & Young, KPMG or PWC. |
Amoah et al. (2017Krishnan, G. V., Myllymäki, E., & Nagar, N. (2020). Does financial reporting quality vary across firm life cycle? Journal of Business Finance & Accounting, 48(5-6), 954-987. https://doi.org/10.1111/jbfa.12508 https://doi.org/10.1111/jbfa.12508...
) |
NivGovit
|
Corporate Governance Level |
( + ) |
Dummy variable that takes the value 1 for the i-th corporate governance level, 0 for the others. |
Brandão et al. (2021Brandão, C. V., Ballarini, L. M., Marques, V. A., & Freitag, V. da C. (2021). Red flags de auditoria e divulgação das deficiências de controles internos nas empresas do IBRX 100. Revista Contemporânea de Contabilidade, 18(48), 22-39. https://doi.org/10.5007/2175-8069.2021.e76636 https://doi.org/10.5007/2175-8069.2021.e...
) |
SegEconi
|
Economy Sector |
(+/-) |
Dummy variable that takes value 1 for the i-th sector, 0 for the others. |
Amoah et al. (2017Krishnan, G. V., Myllymäki, E., & Nagar, N. (2020). Does financial reporting quality vary across firm life cycle? Journal of Business Finance & Accounting, 48(5-6), 954-987. https://doi.org/10.1111/jbfa.12508 https://doi.org/10.1111/jbfa.12508...
) |
Anoit
|
Control of Years |
(+/-) |
Dummy variable that takes value 1 for the i-th sector, 0 for the others. |
Amoah et al. (2017Krishnan, G. V., Myllymäki, E., & Nagar, N. (2020). Does financial reporting quality vary across firm life cycle? Journal of Business Finance & Accounting, 48(5-6), 954-987. https://doi.org/10.1111/jbfa.12508 https://doi.org/10.1111/jbfa.12508...
) |