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

Fang Lou (), Qian Sun () and Hongqi Yuan ()
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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

Frontiers of Business Research in China, 2017, vol. 11, issue 1, 1-26

Abstract: 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.

Keywords: Internal control; Voluntary disclosure; Auditor’s attestation; Self-assessment (search for similar items in EconPapers)
JEL-codes: G34 M48 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1186/s11782-017-0007-5

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