When there is high information asymmetry between directors and managers,independent directors do not have enough information to perform their functions. Only when faced with a good internal information environment can...When there is high information asymmetry between directors and managers,independent directors do not have enough information to perform their functions. Only when faced with a good internal information environment can such directors acquire enough information to provide advice and monitor managers,and only under these conditions can increasing their proportion on the board effectively reduce agency problems, such as driving managers to disclose information to investors. Using a sample of Chinese listed firms that voluntarily disclose their auditors' reports on internal controls from 2007 to 2009, this study explores how the information acquisition costs of independent directors affect their monitoring effectiveness by investigating the disclosure decisions of their internal control audits. We find that when the information asymmetry between insiders and outside directors is low and the proportion of independent directors on a board is high, a firm is more likely to voluntarily disclose its internal control audit report.展开更多
Using propensity score matching （PSM） and the difference-in- difference （DID） approach, this paper explores the characteristics of listed Chinese firms that voluntarily disclose auditors＇ reports on internal cont...Using propensity score matching （PSM） and the difference-in- difference （DID） approach, this paper explores the characteristics of listed Chinese firms that voluntarily disclose auditors＇ reports on internal control and the economic consequences. Using a sample of non-financial firms listed on the main boards of the Shanghai Stock Exchange and the Shenzhen Stock Exchange between 2006 and 2010, we find that firms are more likely to voluntarily disclose their auditors＇ reports on internal control if they have higher state ownership, lower managerial ownership, sanction records, audit committees, non-Big Four auditors as their auditors of annual financial reports, unqualified auditors＇ opinions on financial reports, less board independence, after controlling for firm size, liabilities, performance, and history. Moreover, as compared to a control group that exhibits similar characteristics, firms that voluntarily disclose auditors＇ reports on internal control are associated with positive earnings quality and negative cost of equity capital.展开更多
We examine what determines a firm＇s decision to disclose a self-assessment report on its internal control （IC） system and to further attain an auditor＇s attestation on the report, using a sample of firms from the ...We examine what determines a firm＇s decision to disclose a self-assessment report on its internal control （IC） system and to further attain an auditor＇s attestation on the report, using a sample of firms from the Shanghai Stock Exchange during the period 2006-2010. We hypothesize and find supporting evidence that the likelihood of having voluntary disclosure of IC self-assessment with an auditor＇s attestation is positively related to future equity refinancing, mutuM-fund shareholding, and whether the firm is controlled by the government, especially the central government. Our study also takes the identification problem into consideration, as our sample includes firms with IC weaknesses/deficiencies. Our study not only makes an incremental contribution to the literature, but also has practical implications, especially for regulators and investors in China.展开更多
基金the China National Natural Science Foundation "Internal Control of Listed Companies and Investors Protection" (Project No. 70972076)Humanities Social Science Foundation of the Ministry of Education "Internal Control, Overinvestmentand Financial Crisis" (Project No. 09YJA790199)+2 种基金The Key Research Institutions of Humanities and Social Science Foundation of Guangdong Province "Internal Control and Value Creation–An Empirical Study Based on China’s Capital Market"(Project No. 11JDXM79004)National Social Science Foundation Youth Project (Project No.10CGL041)Academic New Distinguished Scholar Prize 2011 for PhD candidates offered by the Ministry of Education (14000-3191033)
文摘When there is high information asymmetry between directors and managers,independent directors do not have enough information to perform their functions. Only when faced with a good internal information environment can such directors acquire enough information to provide advice and monitor managers,and only under these conditions can increasing their proportion on the board effectively reduce agency problems, such as driving managers to disclose information to investors. Using a sample of Chinese listed firms that voluntarily disclose their auditors' reports on internal controls from 2007 to 2009, this study explores how the information acquisition costs of independent directors affect their monitoring effectiveness by investigating the disclosure decisions of their internal control audits. We find that when the information asymmetry between insiders and outside directors is low and the proportion of independent directors on a board is high, a firm is more likely to voluntarily disclose its internal control audit report.
基金Acknowledgements The author gratefully acknowledges the financial supports from the National Natural Science Foundation of China （No. 70940025） and the Humanities and Social Science Research Project of Ministry of Education of China （No. 11YJC630270）.
文摘Using propensity score matching （PSM） and the difference-in- difference （DID） approach, this paper explores the characteristics of listed Chinese firms that voluntarily disclose auditors＇ reports on internal control and the economic consequences. Using a sample of non-financial firms listed on the main boards of the Shanghai Stock Exchange and the Shenzhen Stock Exchange between 2006 and 2010, we find that firms are more likely to voluntarily disclose their auditors＇ reports on internal control if they have higher state ownership, lower managerial ownership, sanction records, audit committees, non-Big Four auditors as their auditors of annual financial reports, unqualified auditors＇ opinions on financial reports, less board independence, after controlling for firm size, liabilities, performance, and history. Moreover, as compared to a control group that exhibits similar characteristics, firms that voluntarily disclose auditors＇ reports on internal control are associated with positive earnings quality and negative cost of equity capital.
基金We would like to thank Steven Wang, Clive Lennox, Charles Chen, Yaw Mensah, Linda Myers, Yue Heng and workshop participants at Beijing University, Nanjing University, Fudan University, University of International Business and Economics, California State University at Northridge, the Chinese Accounting Professors Association of North American annual conference, and the AAA annual meeting for helpful comments. We acknowledges the financial support of the National Natural Science Foundation of China （No. 71172035, 71272074 and 71572046）.
文摘We examine what determines a firm＇s decision to disclose a self-assessment report on its internal control （IC） system and to further attain an auditor＇s attestation on the report, using a sample of firms from the Shanghai Stock Exchange during the period 2006-2010. We hypothesize and find supporting evidence that the likelihood of having voluntary disclosure of IC self-assessment with an auditor＇s attestation is positively related to future equity refinancing, mutuM-fund shareholding, and whether the firm is controlled by the government, especially the central government. Our study also takes the identification problem into consideration, as our sample includes firms with IC weaknesses/deficiencies. Our study not only makes an incremental contribution to the literature, but also has practical implications, especially for regulators and investors in China.
