The Federal Deposit Insurance Corporation Improvement Act, Bank Internal Controls and Financial Reporting Quality
26 Pages Posted: 17 Sep 2009 Last revised: 7 Feb 2012
Date Written: September 14, 2009
Abstract
Altamuro and Beatty (2009) examine financial reporting quality before and after the Federal Deposit Insurance Corporation Improvement Act (FDICIA). They document increases in the validity of the loan loss provision, earnings persistence, predictability of future cash flows and reductions in benchmark-beating for banks complying with FDIC’s internal control regulations relative to non-complying banks. Our discussion focuses on Altamuro and Beatty’s interpretation of the results, specifically that the internal control provision of FDICIA improved financial reporting quality. In this paper, we provide a brief overview of FDICIA in an attempt to assess the importance of FDIC’s internal control regulations. We then review the findings of other studies on internal control regulations with the goal of evaluating what new insights we gain from Altamuro and Beatty. Next, we report new evidence relating to the subgroups driving the changes in financial reporting quality surrounding FDICIA. Finally, we discuss the results in the context of the current financial crisis and suggest avenues for future research.
Keywords: FDICIA, Internal Control, Financial Reporting Quality
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Determinants of Weaknesses in Internal Control over Financial Reporting
By Jeffrey T. Doyle, Weili Ge, ...
-
Accruals Quality and Internal Control Over Financial Reporting
By Jeffrey T. Doyle, Weili Ge, ...
-
Internal Control Weakness and Cost of Equity: Evidence from Sox Section 404 Disclosures
By Maria Ogneva, Kannan Raghunandan, ...
-
By Jacqueline S. Hammersley, Linda A. Myers, ...
-
Internal Control Weaknesses and Information Uncertainty
By Messod D. Beneish, Mary Brooke Billings, ...
-
The Wealth Change and Redistribution Effects of Sarbanes-Oxley Internal Control Disclosures
By Gus De Franco, Yuyan Guan, ...
-
The Discovery and Reporting of Internal Control Deficiencies Prior to Sox-Mandated Audits
By Hollis Ashbaugh Skaife, Daniel W. Collins, ...
-
By Stephen H. Bryan and Steven B. Lilien