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Effects of corporate governance reform on the quality of internal controls: Evidence from Japan

Author

Listed:
  • Hiroshi Uemura

    (School of Management, Kochi University of Technology)

Abstract

This study examines Japanese corporations that disclose significantdeficiencies (SDs) in internal controls and analyses whether replacing the chief executive (CEO), enhancing the independence of boards of directors, and upgrading the financial expertise of corporate boards are followed by a remediation of SDs. This study demonstrates that Japanese companies which report SDs are more likely to replace their CEOs and to increase the independence of their board of directors. In addition, it finds that replacing CEOs and increasing the board’s independence are unrelated to remediating SDs. However, upgrading the board’s accounting expertise correlates positively with remediation of SDs.

Suggested Citation

  • Hiroshi Uemura, 2014. "Effects of corporate governance reform on the quality of internal controls: Evidence from Japan," Working Papers SDES-2014-4, Kochi University of Technology, School of Economics and Management, revised Oct 2014.
    • Handle: RePEc:kch:wpaper:sdes-2014-4
    as

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    File URL: http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2014-4.pdf
    File Function: First version, 2014
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    internal controls; significant deficiencies; executive turnover; corporate governance independence; corporate governance expertise;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K2 - Law and Economics - - Regulation and Business Law

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