An Entropy Testing Model Research on the Quality of Internal Control and Accounting Conservatism: Empirical Evidence from the Financial Companies of China from 2007 to 2011

Zongrun Wang, Yan Chen, Yanju Zhou and Yanbo Jin

Mathematical Problems in Engineering, 2014, vol. 2014, 1-9

Abstract:

We set information disclosure of internal control as a starting point to explore the relationship between the quality of internal control and accounting conservatism, and then adopt the entropy testing model to calculate the index of the internal control quality with the sample data of Chinese listed companies in financial industry from 2007–2011. Regression results show that earnings conservatism exists. The stronger the internal control is, the higher the accounting conservatism can be. Companies which have enhanced their internal control are more conservative, and these results make no difference with other industries.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:475050

DOI: 10.1155/2014/475050

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