B.S. (Bachelor of Science)
Department of Accountancy
This study aimed to test the relationship between the companies’ financial performances and their effectiveness of internal control (IC) or the compliance to Sarbanes-Oxley Act (SOX) Section 404 in the manufacturing industry in the United States (US) capital market. This study uses secondary data obtained from Wharton Research Data Services (WRDS) of University of Pennsylvania and EDGAR Securities and Exchange Commission database. The secondary data used from the sources are from 2013 to 2017. The data from those years were used to see the relationship between the companies’ effectiveness IC during that period and their financial performances. The result of this study show that based on the means, companies with IC weakness tend to have lower Return on Assets (ROA) and Return on Equity (ROE) compared to companies with effective IC. Based on the statistical test, there is a positive correlation between ROA and ROE of manufacturing company from 2013 to 2017. However, the p-value from the tests indicated that it is statistically insignificant, implying that the industry is a more important determinant to companies’ financial performance (ROA and ROE) than their internal control.
Pradana, Gregorius A., "Relationship Between the Effectiveness of Internal Control and Financial Performance of Manufacturing Companies in the United States: 2013-2017" (2019). Honors Capstones. 956.
Northern Illinois University
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