Internal control material weakness disclosure and misstatement duration
研究发现，在错报期间披露内部控制重大缺陷的公司，其错报持续时间更短，且披露的缺陷数量越多、类型越全面，错报结束得越快，尤其当错报是故意时效果更明显。
Abstract Only a small proportion of companies that announce restatements disclose existing internal control material weaknesses (ICMWs) over financial reporting during misstatement periods. Using a sample of 1939 restatements related to misstatements between 2003 and 2015, we find that misstatement duration decreases with the disclosure of ICMWs during misstatement periods. Our results are robust to different samples and different measures of the dependent and test variables. We also find that the number of ICMWs disclosed is negatively related to misstatement duration. The disclosure of both entity‐level and process‐level ICMWs is associated with misstatements of shorter duration. Moreover, we find that the negative association between ICMW disclosure frequency and misstatement duration is more salient when restatements are intentional. Despite the negative consequences of reporting existing ICMWs found in prior studies, our results suggest that the disclosure of ICMWs can shorten the duration of misstatement periods, leading to more timely improvement in financial reporting. Hence, our evidence provides context and complements prior research suggesting that companies are penalized for disclosing ICMWs.