@article{fb41c16713884837b87bf245e18dd740,
title = "The role of voluntary internal control reporting in earnings quality: Evidence from China",
abstract = "Using discretionary accruals to proxy for earnings quality, this study investigates whether and how the first voluntary internal control reporting in 2007 is associated with earnings quality in China. We find that earnings quality is higher in 2007, yet not in 2006, for public companies issuing a first-time voluntary unqualified internal control report, compared with listed firms not issuing an internal control report. Our findings are consistent with a signalling of performance explanation and inconsistent with a signalling of effectiveness explanation. We also find that earnings quality is lower for public companies issuing an internal control report mentioning a weakness, compared with public companies not issuing an internal control report. Overall, our study suggests that public companies conduct diligent self-assessments when issuing a first-time voluntary unqualified internal control report. Consequently, there is an improvement in earnings quality.",
keywords = "China, First-time reporting, Internal control reporting, Unqualified, Voluntary",
author = "Xudong Ji and Kaplan, {Steven E.} and Wei Lu and Wen Qu",
note = "Funding Information: We acknowledge the valuable comments and suggestions received from the editor and anonymous reviewers. We appreciate the valuable and constructive comments from the workshop participants at Monash University and Deakin University. We would also like to thank the participants and discussants at the 2016 American Accounting Association annual conference in New York and the 2019 Journal of Contemporary Accounting & Economics annual symposium in Putrajaya, Malaysia. Dr Xudong Ji appreciates the financial support provided by Xi'an Jiaotong Liverpool University (Grant Number: RDF1501). Funding Information: We acknowledge the valuable comments and suggestions received from the editor and anonymous reviewers. We appreciate the valuable and constructive comments from the workshop participants at Monash University and Deakin University. We would also like to thank the participants and discussants at the 2016 American Accounting Association annual conference in New York and the 2019 Journal of Contemporary Accounting & Economics annual symposium in Putrajaya, Malaysia. Dr Xudong Ji appreciates the financial support provided by Xi{\textquoteright}an Jiaotong Liverpool University (Grant Number: RDF1501 ). Publisher Copyright: {\textcopyright} 2020 Elsevier Ltd Copyright: Copyright 2020 Elsevier B.V., All rights reserved.",
year = "2020",
month = aug,
doi = "10.1016/j.jcae.2020.100188",
language = "English (US)",
volume = "16",
journal = "Journal of Contemporary Accounting and Economics",
issn = "1815-5669",
publisher = "Elsevier Limited",
number = "2",
}