Can independent directors improve internal control quality in China?

References

• Abbott, L. J., S. Parker, and G. F. Peters. 2004. “Audit Committee Characteristics and Restatements.” Auditing: A Journal of Practice & Theory 23 (1): 69–87. doi: 10.2308/aud.2004.23.1.69
   Web of Science ®Google Scholar
• Ashbaugh-Skaife, H., D. W. Collins, and W. R. KinneyJr. 2007. “The Discovery and Reporting of Internal Control Deficiencies Prior to SOX-Mandated Audits.” Journal of Accounting and Economics 44 (1/2): 166–192. doi: 10.1016/j.jacceco.2006.10.001
   Web of Science ®Google Scholar
• Ashbaugh-Skaife, H., D. W. Collins, W. R. KinneyJr., and R. LaFond. 2008. “The Effect of SOX Internal Control Deficiencies and Their Remediation on Accrual Quality.” The Accounting Review 83 (1): 217–250. doi: 10.2308/accr.2008.83.1.217
   Web of Science ®Google Scholar
• Beasley, M. S. 1996. “An Empirical Analysis of the Relation Between the Board of Director Composition and Financial Statement Fraud.” The Accounting Review 71 (4): 443–465.
   Web of Science ®Google Scholar
• Bhagat, S., and H. Tookes. 2012. “Voluntary and Mandatory Skin in the Game: Understanding Outside Directors’ Stock Holdings.” The European Journal of Finance 18 (3–4): 191–207. doi: 10.1080/1351847X.2011.579739
   Web of Science ®Google Scholar
• Blue Ribbon Committee. 1999. “Report and Recommendations of the Blue Ribbon Committee on Improving the Effectives of Corporate Audit Committees.” The Business Lawyer 54 (3): 1067–1095.
   Web of Science ®Google Scholar
• Bo, H., T. Tao, and Y. M. Sun. 2013. “Board Attributes and Herding in Corporate Investment: Evidence from Chinese-Listed Firms.” The European Journal of Finance. http://dx.doi.org/10.1080/1351847X.2013.788536
   Google Scholar
• Bronson, S. N., J. V. Carcello, and K. Raghunanhan. 2006. “Firm Characteristics and Voluntary Management Reports on Internal Control.” Auditing: A Journal of Practice & Theory 25 (2): 25–39. doi: 10.2308/aud.2006.25.2.25
   Web of Science ®Google Scholar
• Bucciol, A., and R. Miniaci. 2011. “Household Portfolios and Implicit Risk Preference.” The Review of Economics and Statistics 93 (4): 1235–1250. doi: 10.1162/REST_a_00138
   Web of Science ®Google Scholar
• Carcello, J., D. Hermanson, T. Neal, and R. A. Riley. 2002. “Board Characteristics and Audit Fees.” Contemporary Accounting Research 19 (3): 365–384. doi: 10.1506/CHWK-GMQ0-MLKE-K03V
   Web of Science ®Google Scholar
• Chan, P., M. Ezzamel, and D. G. William. 1993. “Determinants of Audit Fees for Quoted Companies.” Journal of Business and Accounting 20 (6): 756–786. doi: 10.1111/j.1468-5957.1993.tb00292.x
   Google Scholar
• Chen, H., and B. Al-Najjar. 2012. “The Determinants of Board Size and Independence: Evidence from China.” International Business Review 21 (5): 831–846. doi: 10.1016/j.ibusrev.2011.09.008
   Web of Science ®Google Scholar
• Chen, H., Y. Hu, and Z. Xiao. 2010. “Corporate Accounting Scandals in China.” In Creative Accounting, Fraud, and International Accounting Scandals, edited by M. Jones, 134–167. Chichester: Wiley.
   Google Scholar
• Chen, Y., R. Knechel, V. B. Marisetty, C. Truong, and M. Veeraraghavan. 2011. Internal Control Weakness and Board Independence: Evidence from SOX 404 Disclosures. Working Paper. http://ssrn.com/abstract=1914150
   Google Scholar
• DeFond, M. L., R. N. Rebecca, and X. Hu. 2005. “Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?” Journal of Accounting Research 43 (2): 153–193. doi: 10.1111/j.1475-679x.2005.00166.x
   Web of Science ®Google Scholar
• Doyle, J. T., W. Ge, and S. E. McVay. 2007. “Determinants of Weaknesses in Internal Control over Financial Reporting.” Journal of Accounting and Economics 44 (1–2): 193–223. doi: 10.1016/j.jacceco.2006.10.003
   Web of Science ®Google Scholar
• Fama, E. F., and M. C. Jensen. 1983. “Separation of Ownership and Control.” Journal of Law and Economic 26 (2): 301–325. doi: 10.1086/467037
   Web of Science ®Google Scholar
• Fang, H., J. Shi, and G. Zhang. 2013. “Ownership Type, Information Quality and Initial Pricing of Corporate Bonds: Empirical Evidence from China's Capital Market.” Journal of Finance Research, no. 4: 170–182 (in Chinese).
   Google Scholar
• Fang, H., H. Sun, and Y. Jin. 2009. “The Corporate Characteristics, External Auditing, and Voluntary Disclosure of Internal Control Information: Evidence from China.” Accounting Research, no. 10: 44–52 (in Chinese).
   Google Scholar
• Francis, J., R. LaFond, and P. M. Olsson. 2004. “Costs of Equity and Earnings Attributes.” The Accounting Review 79 (4): 967–1010. doi: 10.2308/accr.2004.79.4.967
   Web of Science ®Google Scholar
• Goh, B. W. 2009. “Audit Committees, Boards of Directors, and Remediation of Material Weaknesses in Internal Control.” Contemporary Accounting Research 26 (2): 549–579. doi: 10.1506/car.26.2.9
   Web of Science ®Google Scholar
• Guest, P. M. 2009. “The Impact of Board Size on Firm Performance: Evidence from the UK.” The European Journal of Finance 15 (4): 385–404. doi: 10.1080/13518470802466121
   Web of Science ®Google Scholar
• Hoitash, U., R. Hoitash, and J. C. Bedard. 2009. “Corporate Governance and Internal Control over Financial Reporting: A Comparison of Regulatory Regimes.” The Accounting Review 84 (3): 839–867. doi: 10.2308/accr.2009.84.3.839
   Web of Science ®Google Scholar
• Hu, Y., and S. Tang. 2008. “Independence Directors and Earnings Information Quality of Listed Companies.” Management World, no. 9: 150–160 (in Chinese).
   Google Scholar
• Jensen, M. C. 1993. “The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems.” Journal of Finance 48 (3): 831–880. doi: 10.1111/j.1540-6261.1993.tb04022.x
   Web of Science ®Google Scholar
• Johnstone, K., C. Li, and K. H. Purley. 2011. “Changes in Corporate Governance Associated with the Revelation of Internal Control Material Weaknesses and Their Subsequent Remediation.” Contemporary Accounting Research 28 (1): 331–383. doi: 10.1111/j.1911-3846.2010.01037.x
   Web of Science ®Google Scholar
• Kennedy, P. 1998. A Guide to Econometrics. 4th ed. Oxford: Blackwell Publishing.
   Google Scholar
• Krishnan, J. 2005. “Audit Committee Quality and Internal Control: An Empirical Analysis.” The Accounting Review 80 (2): 649–675. doi: 10.2308/accr.2005.80.2.649
   Web of Science ®Google Scholar
• Krishnan, G. V., and G. Visvanathan. 2007. “Reporting Internal Control Deficiencies in the Post-Sarbanes–Oxley Era: The Role of Auditors and Corporate Governance.” International Journal of Auditing 11 (2): 73–90. doi: 10.1111/j.1099-1123.2007.00358.x
   Google Scholar
• Li, P. L., S. Parsa, G. L. Tang, and Z. Z. Xiao. 2012. “Is There an Expectations Gap in the Roles of Independent Directors? An Explorative Study of Listed Chinese Companies.” British Journal of Management 23 (2): 206–222. doi: 10.1111/j.1467-8551.2010.00727.x
   Web of Science ®Google Scholar
• Liang, Q., P. Xu, and P. Jiraporn. 2013. “Board Characteristics and Chinese Bank Performance.” Journal of Banking and Finance 37 (8): 2953–2968. doi: 10.1016/j.jbankfin.2013.04.018
   Web of Science ®Google Scholar
• Lin, B., and J. Rao. 2009. “Why Do Public Firms Voluntarily Disclose Auditors’ Reports on Internal Control? An Empirical Study Based on Signal Theory.” Accounting Research, no. 2: 45–52 (in Chinese).
   Google Scholar
• Liu, Q., and Z. Lu. 2004. Earnings Management to Tunnel: Evidence from China's Listed Companies. Working Paper. School of Economics and Finance, University of Hong Kong.
   Google Scholar
• Mallin, C., and K. Ow-Yong. 2012. “Factors Influencing Corporate Governance Disclosures: Evidence from Alternative Investment Market (AIM) Companies in the UK.” The European Journal of Finance 18 (6): 515–533. doi: 10.1080/1351847X.2011.601671
   Web of Science ®Google Scholar
• Miwa, Y., and J. M. Ramseyer. 2000. “Corporate Governance in Transitional Economies: Lessons from the Prewar Japanese Cotton Textile Industry.” Journal of Legal Studies 29 (1): 171–203. doi: 10.1086/468067
   Web of Science ®Google Scholar
• Muramiya, K., and T. Takada. 2010. Reporting of Internal Control Deficiencies, Restatements, and Management Forecasts. Kobe University Working Paper.
   Google Scholar
• Owusu-Ansah, S., and G. Ganguli. 2010. “Voluntary Reporting on Internal Control Systems and Governance Characteristics: An Analysis of Large U.S. Firms.” Journal of Managerial Issues 22 (3): 383–408.
   Google Scholar
• Plumlee, M., and T. L. Yohn. 2010. “An Analysis of the Underlying Causes Attributed to Restatements.” Accounting Horizons 24 (1): 41–64. doi: 10.2308/acch.2010.24.1.41
   Web of Science ®Google Scholar
• Prendergast, C., and L. Stole. 1996. “Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning.” Journal of Political Economy 104 (6): 1105–1134. doi: 10.1086/262055
   Web of Science ®Google Scholar
• Raheja, C. G. 2005. “Determinants of Board Size and Composition: A Theory of Corporate Boards.” Journal of Financial and Quantitative Analysis 40 (2): 283–306. doi: 10.1017/S0022109000002313
   Web of Science ®Google Scholar
• Ross, S. A. 1977. “The Determination of Financial Structure: The Incentive-Signalling Approach.” The Bell Journal of Economics 8 (1): 23–40. doi: 10.2307/3003485
   Google Scholar
• Sawicki, J. 2009. “Corporate Governance and Dividend Policy in Southeast Asia Pre- and Post-crisis.” The European Journal of Finance 15 (2): 211–230. doi: 10.1080/13518470802604440
   Web of Science ®Google Scholar
• Song, Y., X. Ji, and C. Lee. 2013. “Ownership Balance, Supervisory Efficiency of ID and the Quality of Management Forecasts.” China Journal of Accounting Research 6 (2): 113–132. doi: 10.1016/j.cjar.2013.01.001
   Google Scholar
• Stock, J. H., J. H. Wright and M. Yogo. 2002. “A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments.” Journal of Business and Economics Statistics 22 (4): 518–529. doi: 10.1198/073500102288618658
   Web of Science ®Google Scholar
• Sunden, A., and B. J. Surette. 1998. “Gender Differences in Allocation of Assets in Retirement Savings Plans.” The American Economics Review 88 (2): 207–211.
   Web of Science ®Google Scholar
• Tang, X. S., J. Du, and Q. C. Hou. 2013. “The Effectiveness of the Mandatory Disclosure of Independence Directors’ Opinions: Empirical Evidence from China.” Journal of Accounting and Public Policy 32 (3): 89–125. doi: 10.1016/j.jaccpubpol.2013.02.006
   Web of Science ®Google Scholar
• Tang, X., J. Du, and H. Shen. 2010. “The Incentives of Independent Directors’ Supervision: An Empirical Study Based on Independent Opinions.” Management World, no. 9: 138–149 (in Chinese).
   Google Scholar
• Vafeas, N. 1999. “Board Meeting Frequency and Firm Performance.” Journal of Financial Economics 53 (1): 113–142. doi: 10.1016/S0304-405X(99)00018-5
   Web of Science ®Google Scholar
• Wang, H. 2011. “Identifying Internal Control Weaknesses: The Current Situation, the Difficulties and Basic Structure Reestablished.” Accounting Research, no. 8: 61–67 (in Chinese).
   Google Scholar
• Wu, Z. Y., Y. S. Li, S. J. Ding, and C. X. Jia. 2013. “A Separate Monitoring Organ and Disclosure of Firm-Specific Information.” The European Journal of Finance. http://dx.doi.org/10.1080/1351847X.2012.762410
   Google Scholar
• Xiao, Z., J. Dahya, and Z. Lin. 2004. “A Grounded Theory Exposition of the Role of the Supervisory Board in China.” British Journal of Management 15 (1): 39–55. doi: 10.1111/j.1467-8551.2004.t01-1-00399.x
   Web of Science ®Google Scholar
• Ye, K., J. Zhu, Z. Lu, and R. Zhang. 2011. “The Independence of Independent Directors: Based on Voting of Boards of Directors.” Journal of Economic Research 46 (1): 126–139 (in Chinese).
   Google Scholar
• Zhang, Y., J. Zhou, and N. Zhou. 2007. “Audit Committee Quality, Auditor Independence and Internal Control Weaknesses.” Journal of Accounting and Public Policy 26 (3): 300–327. doi: 10.1016/j.jaccpubpol.2007.03.001
   Google Scholar