The effect of information technology (IT) material weaknesses in internal control on chief financial officer (CFO) turnover

Abstract

AbstractThis study examines the relationship between CFO turnover and adverse SOX Section 404 opinions relating to IT material weaknesses over a 4‐year period after implementation of SOX 404 requirements. Prior research has shown that IT material weaknesses in internal controls are associated with higher audit fees than are other types of material weaknesses. Prior research also suggests an association between poor financial performance and CFO turnover. The results of this study show that companies with IT related material weaknesses are more likely to have more CFO turnover relative to companies with non‐IT related material weaknesses. These results contribute to the stream of research exploring the implications of IT material weaknesses in organizations.