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This study investigates the role that a firm’s internal audit function (IAF) plays in the disclosure of material weaknesses reported under Section 404 of the Sarbanes-Oxley Act of 2002 (U.S. Congress 2002). Using data from 214 firms, we examine the relation between material weakness (MW) disclosures and various IAF attributes and activities. Our results indicate that MW disclosures are negatively associated with the education level of the IAF and the extent to which the IAF incorporates quality assurance techniques into fieldwork, audits activities related to financial reporting, and monitors the remediation of previously identified control problems. The timing of Section 404 work and the nature of follow-up monitoring suggests that these aspects of IAF quality help prevent MWs from occurring. We find that MW disclosures are positively associated with the IAF practice of grading audit engagements and external-internal auditor coordination, suggesting that these activities increase the effectiveness of Section 404 compliance processes.

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Prior research suggests that supply chain collaboration has enabled companies to compete more efficiently in a global economy. We investigate a class of collaboration software for product development called collaborative product commerce (CPC), and estimate its impact on product quality, design cycle time and development cost. We develop a theoretical framework to study the impact of CPC on product design and development. Based on data from CPC implementations in 72 firms, we test and empirically validate research hypotheses on the impact of CPC. We find that CPC implementation is associated with greater collaboration among product design teams which, in turn, have a significant positive impact on product quality and a reduction in cycle time and product development cost. Based on a subset of firms for which operational metrics were collected, we find that CPC is associated with substantial quantifiable improvements in product design quality, design turnaround times, and product development and rework costs.

Japan. he has ten years of management consulting experience and has advised fortune 500 executives on information technology strategy and systems implementation.haluk demIrkan is a Clinical associate Professor of Information Systems and a research faculty member of the Center for Services leadership at the W.P. Carey School of Business at arizona State university. he has a Ph.D. in Information Systems and Operations Management from the university of florida. his research in service science and service-oriented management and technology solutions has included recent industry-sponsored research projects with american Express, Intel, IBM, Micro-Strategy, and teradata. other leading journals. he has 15 years of consulting experience in the areas of service-oriented solutions, information supply chain, business intelligence, and strategic business engineering with fortune 100 companies. he is the recent recipient of the IBM faculty award for a research project titled "Design Science for Self-Service Systems." P.k. kannan is a Professor of Marketing in the robert h. Smith School of Business at the university of Maryland. he is the Director for the Center of Excellence in Service. his research focuses on new product/service development, design and pricing of digital products and product lines, marketing and product development on the Internet, e-service, and customer loyalty. he has received several

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T he business case for investing in information technology (IT) has received increasing scrutiny in recent years. We propose that IT investments create additional business value through interactions with other business processes. In this paper, we formalize the interaction effect of IT by focusing on one core function, namely, research and development (R&D). We hypothesize that investments in IT can interact with and complement a firm's R&D investments, enhancing the firm's shareholder value creation potential. We test this by hypothesis by estimating the interaction impact of IT and R&D investments on Tobin's q, a forward-looking measure of firm performance using a recent multiyear, firm-level, archival data set. Our results suggest that the interaction effect of R&D and IT on Tobin's q is positive and significant after controlling for other firm-and industryspecific effects. Our findings provide rigorous empirical support for recent anecdotal evidence in the managerial literature with respect to the manner in which IT is enabling R&D-intensive innovation processes. Our analysis underscores the need for coordinated investments in IT and R&D, and permeating IT capabilities throughout other business processes such as R&D.