According to optimal contracting theory, compensation contracts are effective in solving the agency problem between stockholders and managers. Executive compensation is naturally related to firm performance. However, contracts are not always perfect. Managers may exert influence on the...

We examine why many firms disclose internal control weaknesses (ICW) under section 404 of Sarbanes-Oxley Act after previously reporting effective internal control (IC). We find that about half of the cross-sectional ICW determinant variables either do not change significantly from Year T-1 to...

We find that firms reporting internal control material weakness (ICW) under Section 404 of Sarbanes-Oxley Act have 13% lower valuation than non-ICW firms based on Tobin's q. This valuation difference is mainly driven by stock underperformance of more than 13% during the year before ICW...

Purpose: This paper aims to answer following three important but not well-answered or unanswered questions in the extant trust literatures: What is the true magnitude that trust impacts on performance? Is there any consistency among the effects of trust on performance at different levels? How...