This paper investigates the impact of internal control effectiveness (ICE) on the level of textual risk disclosure (TRD; including aggregate risk disclosure and its tone of good news and bad news about risk). Our findings suggest that firms with an ineffective internal control system exhibit significantly lower levels of TRD than firms with effective internal controls. Besides, we show a significant change in TRD behavior provided by managers of firms with recurrent ineffective internal controls. Pursuant to agency theory, this behavior change is prompted to reduce the expected public uncertainty and agency problems. We also investigate the usefulness of ICE reporting and TRD to the market. Results suggest that firms reporting ineffective internal controls are likely to have higher investor-perceived risk than firms reporting effective internal controls. Furthermore, TRD improves firms' market liquidity, and such improvement is principally driven by good news rather than bad news about risk. Collectively, our results fill an apparent gap in the literature on the importance of ICE, as well as the usefulness of the external auditor's attestation on a firm's internal controls and management TRD.

本文研究了内部控制有效性（ICE）对文本风险披露（TRD；包括总体风险披露及其关于风险的好消息和坏消息的基调）的影响。我们的研究结果表明，内部控制体系无效的公司的TRD水平显着低于内部控制体系有效的公司。此外，我们展示了经常性无效内部控制的公司经理提供的 TRD 行为的显着变化。根据代理理论，这种行为改变被促使减少预期的公共不确定性和代理问题。我们还调查了 ICE 报告和 TRD 对市场的有用性。结果表明，报告无效内部控制的公司可能比报告有效内部控制的公司具有更高的投资者感知风险。此外，TRD 提高了公司的市场流动性，这种改善主要是由好消息而不是关于风险的坏消息驱动的。总的来说，我们的结果填补了文献中关于 ICE 重要性的明显空白，以及外部审计师证明对公司内部控制和管理 TRD 的有用性。