Do Material Weaknesses in Information Technology Related Internal Controls Affect Firms’ 8-K Filing Behavior?

• In Event: Financial Accounting and Reporting 2

Abstract

Form 8-K reporting represents a different (and relatively unknown) information environment than annual 10-K filings. The current study uses a unique, comprehensive sample of 118,863 firm-year 8-K filing event observations to investigate the association between firms’ Form 8-K reporting behavior and their internal control weaknesses. In addition, the study investigates the association between firms’ 8-K reporting and their information technology (IT) related internal control weaknesses. Overall, we find strong and robust evidence of a negative relation between the likelihood of the firm reporting a material internal control weakness and the timeliness of the firms’ 8-K filing behavior. We also find distinguishing effects of weaknesses in IT-related controls. Given recent interest in IT related controls and far-reaching reforms aimed at improving disclosure timeliness, increasing the quality of internal controls and improving the quality of accounting information, our study is relevant to accounting information systems academics, regulators, accounting standard setters and other interested observers.

Authors

• Anthony Dewayne Holder, University of Toledo

• Khondkar E Karim, University of Massachusetts-Lowell

• Karen Lin, University of Massachusetts-Lowell

• Robert E Pinsker, Florida Atlantic University - Boca