Publication:
Using the Analytic Hierarchy Process to Assess the Impact of Internal Control Weaknesses on Firm

Loading...
Thumbnail Image
Date
2020-08-28
Advisor
Court
Journal Title
Journal ISSN
Volume Title
Publisher
Creative Decisions Foundation
Defense Date
Metrics
Citation
Research Projects
Organizational Units
Journal Issue
Abstract
Since the passage of the Sarbanes-Oxley Act (SOX) of 2002, many studies have examined the impact of material weaknesses in internal control systems (MWICS) on firm performance. Overall, these studies indicate that a negative association exists between poor internal control and firm performance. Prior research suggests that the above noted association between internal control and firm performance should be affected by both the actual number and the different types of MWICS. However, this stream of research has focused on using a binary measure for internal control and has not considered the combined impact that the different types of MWICS may have on firm performance. In this study, we create and introduce a new internal control index, derived from the Analytic Hierarchy Process (AHP). We then show that more information regarding the impact of MWICS can be obtained through our AHP index measure as opposed to the binary measure that is commonly used. These findings have important implications for a firm’s stakeholders (e.g., managers, stockholders, creditors, financial analysts, employees, and auditors).
Unesco subjects
License
Attribution 4.0 International
School
IE Business School
Center
Keywords
Citation
Wilford, A. L., Bodin, L. D., & Gordon, L. A. (2020). Using the analytic hierarchy process to assess the impact of internal control weaknesses on firm performance. International Journal of the Analytic Hierarchy Process, 12(2). https://doi.org/10.13033/ijahp.v12i2.709.