This study investigates the impact of internal controls over financial reporting requirements (ICFR) enacted as part of the Sarbanes-Oxley Act of 2002 on the judgment and decision making of corporate tax executives. Prior research indicates that companies with disclosed material weaknesses in internal controls face significant capital-markets based consequences (Ashbaugh-Skaife et al. 2009; Hammersley 2008; Cheng et al. 2006). However, prior research has not examined whether these consequences impact the decision making of corporate executives. The current study examines the decisions of corporate tax executives to amend or not amend a prior year tax return when a discovered error will be classified as either a significant deficiency or a material weakness. Although the overall likelihood to amend the tax return is high, I find that tax executives are less likely to amend a prior year tax return when the cause of the discovered error will be classified as a material weakness than when the cause will be classified as a significant deficiency. This result indicates that the required ICFR disclosure rules impact company executives' decisions. In addition, if executives are willing to hide or not disclose an internal control deficiency, the overall reliability of the reporting on ICFR may be limited.
","abstract_html":"<p>This study investigates the impact of internal controls over financial reporting requirements (ICFR) enacted as part of the Sarbanes-Oxley Act of 2002 on the judgment and decision making of corporate tax executives. Prior research indicates that companies with disclosed material weaknesses in internal controls face significant capital-markets based consequences (Ashbaugh-Skaife et al. 2009; Hammersley 2008; Cheng et al. 2006). However, prior research has not examined whether these consequences impact the decision making of corporate executives. The current study examines the decisions of corporate tax executives to amend or not amend a prior year tax return when a discovered error will be classified as either a significant deficiency or a material weakness. Although the overall likelihood to amend the tax return is high, I find that tax executives are less likely to amend a prior year tax return when the cause of the discovered error will be classified as a material weakness than when the cause will be classified as a significant deficiency. This result indicates that the required ICFR disclosure rules impact company executives' decisions. In addition, if executives are willing to hide or not disclose an internal control deficiency, the overall reliability of the reporting on ICFR may be limited.</p>","abstract_has_math":false,"creators":["Hansen, Victoria J."],"institution":null,"degree_name":"Ph.D.","degree_level":"Campus Access Dissertation","degree_discipline":"Moore School of Business","degree_department":null,"school":null,"contributors":["Richard White"],"advisors":[],"committee_chairs":[],"committee_members":[],"year":2012,"date_issued":"2012-01-01T08:00:00Z","date_published":"2012-01-01T08:00:00Z","updated_at":"2026-07-24T04:38:07Z","subjects":["Business","Business Administration, Management, and Operations","ICFR","Internal Controls","Material Weakness","Tax"],"languages":[],"rights":["© 2012, Victoria J. Hansen"],"rights_urls":[],"identifier_entries":[]},"links":{"outbound_url":"https://scholarcommons.sc.edu/etd/456","outbound_label":"Repository record","outbound_source":"dc:identifier"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor","label":"Contributor","values":["Richard White"]},{"key":"dc:creator","label":"Author","values":["Hansen, Victoria J."]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"thesis:degree_discipline","label":"Discipline","values":["Moore School of Business"]},{"key":"thesis:degree_level","label":"Degree Level","values":["Campus Access Dissertation"]},{"key":"thesis:degree_name","label":"Degree Name","values":["Ph.D."]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Business","Business Administration, Management, and Operations","ICFR","Internal Controls","Material Weakness","Tax"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:rights","label":"Dc Rights","values":["© 2012, Victoria J. Hansen"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier","label":"Identifier","values":["https://scholarcommons.sc.edu/etd/456"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description.abstract","label":"Abstract","values":["This study investigates the impact of internal controls over financial reporting requirements (ICFR) enacted as part of the Sarbanes-Oxley Act of 2002 on the judgment and decision making of corporate tax executives. Prior research indicates that companies with disclosed material weaknesses in internal controls face significant capital-markets based consequences (Ashbaugh-Skaife et al. 2009; Hammersley 2008; Cheng et al. 2006). However, prior research has not examined whether these consequences impact the decision making of corporate executives. The current study examines the decisions of corporate tax executives to amend or not amend a prior year tax return when a discovered error will be classified as either a significant deficiency or a material weakness. Although the overall likelihood to amend the tax return is high, I find that tax executives are less likely to amend a prior year tax return when the cause of the discovered error will be classified as a material weakness than when the cause will be classified as a significant deficiency. This result indicates that the required ICFR disclosure rules impact company executives' decisions. In addition, if executives are willing to hide or not disclose an internal control deficiency, the overall reliability of the reporting on ICFR may be limited.
"]},{"key":"dc:title","label":"Title","values":["Unintended Consequences of Internal Controls Over Financial Reporting"]}]}],"canonical_facts":{"dc:contributor":["Richard White"],"dc:creator":["Hansen, Victoria J."],"dc:description.abstract":["This study investigates the impact of internal controls over financial reporting requirements (ICFR) enacted as part of the Sarbanes-Oxley Act of 2002 on the judgment and decision making of corporate tax executives. Prior research indicates that companies with disclosed material weaknesses in internal controls face significant capital-markets based consequences (Ashbaugh-Skaife et al. 2009; Hammersley 2008; Cheng et al. 2006). However, prior research has not examined whether these consequences impact the decision making of corporate executives. The current study examines the decisions of corporate tax executives to amend or not amend a prior year tax return when a discovered error will be classified as either a significant deficiency or a material weakness. Although the overall likelihood to amend the tax return is high, I find that tax executives are less likely to amend a prior year tax return when the cause of the discovered error will be classified as a material weakness than when the cause will be classified as a significant deficiency. This result indicates that the required ICFR disclosure rules impact company executives' decisions. In addition, if executives are willing to hide or not disclose an internal control deficiency, the overall reliability of the reporting on ICFR may be limited.
"],"dc:identifier":["https://scholarcommons.sc.edu/etd/456"],"dc:rights":["© 2012, Victoria J. Hansen"],"dc:subject":["Business","Business Administration, Management, and Operations","ICFR","Internal Controls","Material Weakness","Tax"],"dc:title":["Unintended Consequences of Internal Controls Over Financial Reporting"],"thesis:degree_discipline":["Moore School of Business"],"thesis:degree_level":["Campus Access Dissertation"],"thesis:degree_name":["Ph.D."]},"updated_at":"2026-07-24T04:38:07Z"}