Research

Management Use of Image Restoration Strategies to Address SOX 404 Material Weakness

The purpose of this study is to investigate one specific industry, banking, and its management responses to material weaknesses in internal control within its Sarbanes-Oxley Section 404 reporting. Benoit’s (1995) image restoration typology assists in the determination of the communication strategies management uses to explain how such material weaknesses occur and how management intends to address those weaknesses. Results show that the majority of banks use corrective action when addressing material weaknesses. However, several firms use other non-corrective action communication strategies, which may indicate that management reporting is potentially not transparent. Statistical analysis indicates that banking firms using noncorrective action strategies are larger and display slower asset growth, lower market risk, and lower asset quality than corrective action firms.

Publication Information
Article Title: Management Use of Image Restoration Strategies to Address SOX 404 Material Weakness
Journal: Academy of Accounting and Financial Studies Journal (Jun, 2009)
Author(s): Weber, Marsha;  Erickson, Sheri;  Segovia, Joann;  Dudney, Donna
Researcher Information
    
Dudney, Donna
Dudney, Donna
Associate Dean of Undergraduate Curriculum and Programs
Expertise:
  • Financial Institutions
  • Financial Markets & Investing
  • Managerial Economics
Finance
CoB 301 G
P.O. Box 880490
University of Nebraska-Lincoln
Lincoln, NE 68588-0490, USA
Phone: (402) 472-5695
Fax: (402) 472-5180
ddudney@unl.edu