|
Communication of Material Weaknesses in SEC Filings by Computer Companies
Sheri L Erickson, Minnesota State University Moorhead
Joann Segovia, Minnesota State University Moorhead
Marsha Weber, Minnesota State University Moorhead
Donna Dudney, University of Nebraska Lincoln
ABSTRACT. We analyze the Section 404 reports of 133 computer companies to determine the communications strategies firms use to address their material weaknesses in internal control. Based on Benoit’s (1995) image restoration typology, we find that the majority of the firms use corrective action. However, some instances result in management using other strategies that include denial; evasion of responsibility; or reducing the problem through image bolstering, minimizing the weakness, or differentiation. We find that these other strategies occur in firms that have higher total assets, book value, and market capitalization but lower sales and asset growth rates than the averages for the computer industry. These firms reported a higher percentage of material weakness disclosures relating to operations of their subsidiaries, the control environment, technology related controls, and segregation of duties than the other computer companies reporting material weaknesses.
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|