Shareholder Value Implications of the Internal Audit Function

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Shareholder Value Implications of the Internal Audit Function

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Title: Shareholder Value Implications of the Internal Audit Function
Author(s):
Liu, Bo
Advisor: Cready, William M.
Date Created: 2017-08
Format: Dissertation
Keywords: Auditing, Internal
Financial statements—Law and legislation
Stockholder wealth
Corporations—Investor relations
Abstract: In 2013, NASDAQ Stock Market LLC (NASDAQ) issued a proposal to mandate the internal audit function (IAF) for all listed companies but later withdrew the proposal. In this study, I investigate whether a mandatory IAF adds shareholder value and how the value implications vary across companies. For companies that do not voluntarily adopt an IAF before the proposal, I document a positive (negative) price response to the NASDAQ IAF proposal filing (withdrawal). This evidence suggests that, on average, investors perceive a mandatory IAF as value enhancing. I also document that the market reactions are more positive for companies with more business segments or with lower institutional ownership. This evidence suggests that investors’ perception of the mandatory IAF are more positive for companies with complex business or with weak corporate governance. In addition, I document the types of companies that are more likely to establish an IAF voluntarily.
Degree Name: PHD
Degree Level: Doctoral
Persistent Link: http://hdl.handle.net/10735.1/5510
Type : text
Degree Program: Management Science

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