Conclusion
Using a unique data set from the SSE during the period 2006–2010, we examine the determinants and/or incentives for a firm’s voluntary IC-disclosure decision, as well as its decision additionally to have an auditor’s attestation on the IC report. We hypothesize and find supporting evidence that a firm with the government, especially the central government, as its largest shareholder, with more mutual fund shareholding, and with an equity refinancing plan in the near future, is more likely to disclose an IC self-assessment report and to attain an auditor’s attestation on the report. Our study contributes incrementally to the literature in several ways. Firstly, we study not only the determinants of voluntary disclosure of IC information, but also the determinants of voluntarily having an auditor’s attestation on the IC report. The decision to have an auditor’s attestation on an IC report is important, especially in developing countries, as it can further enhance the credibility of the report. Secondly, our finding that an IC report with an auditor’s attestation can facilitate seasoned-equity issuing is also new in the literature.
Our study shows that credible and voluntary disclosure of IC self-assessment has some signaling effect in the market. Thirdly, our sample includes firms with IC weaknesses. This allows us to address the identification problem that previous studies have not addressed. Our finding is that mutual-fund investors have a positive impact on the credible disclosure of IC reports even when the firm has shown IC weakness. This is an affirmation that mutual funds can play a role in enhancing effective corporate governance. It is also an affirmation of the efforts on the part of the CSRC to develop a mutual-fund industry in China.
