Grupo de Investigación Económica y Financiera

Do Employees Know Best? Crowd Wisdom and Internal Control Material Weakness

Jian Zhou |

Data d'inici 9 jun, 2022 | 12:30 hores
Data de finalització 9 jun, 2022 | 14:30 hores
Jian Zhou

We investigate the impact of business outlook from Glassdoor employee rating of employers on internal control material weaknesses (ICMW). When the mean business outlook is good, firms are less likely to report ICMW; firms are also less likely to report employee-related ICMW and report a smaller number of ICMW. The cross-sectional tests show that the negative relationship between business outlook and ICMW is stronger for Big 4 clients, firms with more segments, longer employee tenure. The negative relationship is weaker for firms in litigious industries. We further find employee business outlook is negatively related to disclosure control ICMW and going concerns. We mitigate the endogeneity concern by employing the Anti-SLAPP laws as an exogenous shock.


Data d'inici 9 jun, 2022 | 12:30 hores
Data de finalització 9 jun, 2022 | 14:30 hores
Autors
Jian Zhou
Jian Zhou

Deloitte Foundation Distinguished Professor of Accounting, University of Hawaii at Manoa