Voluntary disclosure of internal control and auditor＇s attestation： evidence from China

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.

A countermeasure designed to restrain self-serving behavior and strategic rating disclosure of credit rating agencies

This study examines an incentive of the credit rating agency(CRA)to exert effort to observe projects’signals and strategically disclose ratings when the upfront fee and performance-based fee scheme are imposed.Under the upfront fee scheme,the CRA obtains an upfront fee in exchange for its services but gains a performance-based fee only if its ratings accurately foresee the rated project’s outcome.In the setting,an issuer solicits a rating from the CRA,whose conduct of inflating and deflating ratings is considered.In addition,the CRA can endogenously exert effort to observe a project’s signal,which specifies the signal accuracy and how much operating costs the CRA incurs.After receiving the observed signal,the CRA can strategically decide to announce a rating corresponding to or contradicting the observed signal.The findings reveal that the performance-based fee scheme incentivizes the CRA to exert greater effort and truthfully disclose a more accurate rating.

Product market competition and the disclosure of supply chain information

We investigate how product market competition affects corporate voluntary disclosure decisions,specifically regarding supply-chain information.Our results,based on a sample of manufacturing companies listed in China from 2010 to 2016,show that companies in more competitive industries disclose less customer/supplier information.The main results stand through several robustness tests.Further analyses show that the negative relationship between product market competitiveness and supply-chain information disclosure is stronger when the disclosure contains more incremental information and when competitors are more capable of gaining competitive advantage using the disclosed information.Our study contributes to the understanding of both the relationship between product market competition and voluntary disclosure decisions and the regulation of information disclosure to build a transparent capital market.