Do internal control personnel affect post-earnings announcement drift? Evidence from the Korean stock market

ABSTRACT

This study investigates the relationship between a firm with a sufficient number of personnel in charge of its internal controls and post-earnings announcement drift (PEAD). Having enough internal control personnel is expected to increase the transparency and reliability of accounting information, reduce the delay in investors’ decision-making, and ultimately reduce PEAD. The empirical results show that PEAD is reduced when the size of a firm’s internal control workforce is adequate. This study contributes to the literature by finding that having a sufficient number of internal personnel responsible for a company’s accounting information is an additional factor that influences PEAD.

KEYWORDS:

• Internal control system
• internal control personnel
• internal control human resources
• post-earnings announcement drift
• PEAD

JEL CLASSIFICATION:

• G14
• G30
• M41
• M42

Disclosure statement

No potential conflict of interest was reported by the author.

Data availability statement

The data regarding personnel in charge of internal controls and earnings disclosure dates were manually collected from the electronic disclosure system of the Financial Supervisory Service. In addition, financial and stock price data were obtained from KIS-VALUE and Fn-Guide.