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

Author

Listed:
  • Fang Lou

    (School of Economics, Shanghai University of Finance and Economics)

  • Qian Sun

    (School of Management, Fudan University)

  • Hongqi Yuan

    (School of Management, Fudan University)

Abstract

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, mutual-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.

Suggested Citation

  • Fang Lou & Qian Sun & Hongqi Yuan, 2017. "Voluntary disclosure of internal control and auditor’s attestation: evidence from China," Frontiers of Business Research in China, Springer, vol. 11(1), pages 1-26, December.
    • Handle: RePEc:spr:fobric:v:11:y:2017:i:1:d:10.1186_s11782-017-0007-5
    DOI: 10.1186/s11782-017-0007-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Internal control; Voluntary disclosure; Auditor’s attestation; Self-assessment;
    All these keywords.

    JEL classification:

    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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