Investors punish firms that disclose internal control weakness as required by Sarbanes-Oxley provisions, but having a Big Four auditor mitigates the negative price hit, according to new research out of Indiana University.

The findings appear in two separate research papers by Leslie Hodder, assistant professor of accounting at Indiana University's Kelley School of Business. Hodder frames those papers as a rebuke to arguments that the provisions are a waste of an accounting firm's time and money on issues that are of no consequence to investors.

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