Premium
CEO Characteristics and Internal Control Quality
Author(s) -
Lin YuChen,
Wang YingChieh,
Chiou JengRen,
Huang HuaWei
Publication year - 2014
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/corg.12042
Subject(s) - control (management) , affect (linguistics) , quality (philosophy) , weakness , accounting , business , empirical research , psychology , economics , management , medicine , communication , philosophy , anatomy , epistemology
Manuscript Type Empirical Research Question/Issue This study investigates the influence of CEO characteristics on internal control quality in the U . S . Research Findings/Insights Using a sample of 4,374 E xecu C omp non‐financial firms, we find that CEO entrenchment and age are significantly associated with a material internal control weakness disclosure ( MW ) under S arbanes‐ O xley S ection 404 ( SOX 404). Our results demonstrate that entrenchment and age may affect CEO s' behavior in response to the SOX 404 internal control requirements. Theoretical/Academic Implications This study provides empirical support for the influence of CEO characteristics on material internal control weakness. As a result, the effects of internal control mechanisms are likely to be decreased in firms with entrenched and younger CEOs , consistent with entrenchment theory. Practitioner/Policy Implications This study offers insights to regulators and lawmakers interested in the effects of CEO characteristics on internal control weakness. Importantly, it points out that CEO entrenchment and age are likely to affect the strength of internal control mechanisms.