In general, conglomeration leads to a diversification of risks (the diversification benefit) and to a decrease in shareholder value (the conglomerate discount). Diversification benefits in financial conglomerates are typically derived without accounting for reduced shareholder value, even though a comprehensive analysis requires competitive conditions within the conglomerate, i.e., shareholders...

Since the introduction of the Sarbanes-Oxley (SOX) Act in 2002, companies have begun to place more emphasis on information technology (IT) internal controls. IT internal controls are policies that provide assurance that technical systems operate as intended, provide reliable data, and comply with regulations. Research suggests that firms with strong internal controls perform better than those w...

In response to the enactment of the Sarbanes-Oxley Act 2002 and of the release of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5, this study develops a risk-based evidential reasoning approach for assessing the effectiveness of internal controls over financial reporting (ICoFR). This approach provides a structured methodology for assessing the effectiveness of ICo...

Individual shareholders often choose to invest a substantial fraction of their wealth in one firm thereby having operational control of the firm through the voting power attached to the shares. In doing so the shareholder reduces the diversification of their personal investment portfolio. A controlling shareholder can also use leverage to increase their voting power, which further increases the...

In this article, the authors strengthen the chain of effects that link customer satisfaction to shareholder value by establishing the link between satisfaction and two characteristics of future cash flows that determine the value of the firm to shareholders: growth and stability. Using longitudinal American Customer Satisfaction Index and COMPUSTAT data and hierarchical Bayesian estimation, the...