The Effects of Internal Controls on the Audit Completeness and Reliability of Earnings Announcements

SYNOPSIS We examine how internal control effectiveness influences the audit completeness of earnings announcements and consequences on reliability. One intentions Sarbanes-Oxley Act 2002 (SOX) was for controls to improve financial reporting. Although we show that effective directly reduce announcement revisions as SOX would intend, also find evidence it provides management with confidence release their disclosure earlier (with a less complete audit), indirectly increasing likelihood revisions. As result, beneficial impact reliability is significantly undermined in regulatory environment where companies are permitted disclose preliminary public. Our study important insights policymaking accounting practitioners who responsible producing reliable disclosure. Data Availability: available from public sources cited text. JEL Classifications: M41; M42; M48.