a5_internal control over financial repo匹rting and managerial rent extraction.docxVIP

Internal control over financial reporting and managerial rent extraction: Evidence from the profitability of insider trading 内部控制与财务报告和管理租金的提取：从内幕交易的盈利证据 1. Introduction abstract This paper examines the association between ineffective internal control over financial reporting and the profitability of insider trading. We predict and find that the profit- ability of insider trading is significantly greater in firms disclosing material weaknesses in internal control relative to firms with effective control. The positive association is present in the years leading up to the disclosure of material weaknesses, but disappears after remediation of the internal control problems. We find insider trading profitability is even greater when insiders are more likely to act in their own self-interest as indicated by auditors’ weak ‘‘tone at the top’’ adverse internal control opinions and this incremental profitability is driven by insider selling. Our research identifies a new setting where shareholders are most at risk for wealth transfers via insider trading and highlights market consequences of weak ‘‘tone at the top’’. 本文探讨了无效的内部控制，财务报告及内幕交易的盈利能力之间的关联。我们预测和发现内幕交易的获利能力显著更大的企业披露在控制相对内重大缺陷，以公司的实际控制。的正相关关系是存在在导致重大缺陷的披露多年，但内部控制问题整治后消失。我们发现内幕交易获利就更大，当业内人士更容易受核数师的弱高层基调不利的内部控制意见，指示，而且此增量盈利能力是由内线售股带动其自身利益行事。我们的研究确定了新的设置，股东通过内幕交易和亮点的弱音的市场后果上方是最危险的财富转移。 This study examines whether the effectiveness of internal control over financial reporting (ICFR) is related to the profitability of insider trading. ICFR are the policies, processes, and procedures intended to ensure financial statements are reliable. It is well documented in the prior literature that reliable financial reporting is an important mechanism used by firms to communicate credible information to outsiders for their use in resource allocation decisions and in evaluating management’s performance (see, e.g., Beyer et al., 2010). When firms have ineffective ICFR, managers have more discretion over accounting estimates and methods