Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/187571 
Year of Publication: 
2012
Citation: 
[Journal:] China Journal of Accounting Research [ISSN:] 1755-3091 [Volume:] 5 [Issue:] 2 [Publisher:] Elsevier [Place:] Amsterdam [Year:] 2012 [Pages:] 145-161
Publisher: 
Elsevier, Amsterdam
Abstract: 
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.
Subjects: 
Voluntary disclosure
Auditors' reports on internal controls
Board independence
Internal information environment
JEL: 
G30
K22
M41
D23
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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