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Article
Publication date: 20 August 2020

Huixiang Zeng, Li Yang and Jing Shi

Internal audit executives instruct the internal audit department to supervise corporate business management activities, evaluate internal controls and risks and provide…

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Abstract

Purpose

Internal audit executives instruct the internal audit department to supervise corporate business management activities, evaluate internal controls and risks and provide recommendations for operating. Therefore, this paper aims to confirm whether and how the supervisory ability of the chief internal audit executive enhances the internal audit department’s function to prevent corporate fraud. Based on the results, this paper further researches the role of the supervisory board position in this relationship.

Design/methodology/approach

This paper examines 922 small and medium-sized listed enterprises in China from 2010 to 2017 and empirically investigates the influence of the internal audit executive’s supervisory ability (IAESA) on the occurrence of corporate fraud.

Findings

The results reveal that the IAESA is significantly negatively correlated with the occurrence of corporate fraud. This suppression effect is more pronounced when the internal audit executive is also the company’s supervisor. However, if the internal audit executive is the chairman of the board of supervisors, the suppression effect no longer exists. This paper therefore confirms that the IAESA curbs corporate fraud via the improvement of the internal corporate control level.

Research limitations/implications

Because the sample data was limited by the information disclosure level of the included companies, the sample size was relatively small as compared with those of other studies.

Practical implications

This study not only expands the research perspective in the field of internal audit functions but also provides a decision-making reference for the prevention of corporate fraud.

Social implications

This paper extends an approach that might be able to curb corporate fraud.

Originality/value

A comprehensive index was developed using data envelope analysis to quantify the supervisory ability of internal audit executives. Based on this, this research confirms that the internal audit department performs a “firewall function” to prevent corporate fraud.

Details

International Journal of Accounting & Information Management, vol. 29 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 21 August 2019

Zhifang Zhou, Tao Zhang, Jiachun Chen, Huixiang Zeng and Xiaohong Chen

This paper investigates the relationship between product market competition and firms’ water information disclosure and how firms’ ownership type can affect this relationship in…

715

Abstract

Purpose

This paper investigates the relationship between product market competition and firms’ water information disclosure and how firms’ ownership type can affect this relationship in China, offering new insights into corporate water management.

Design/methodology/approach

The authors investigated 303 Chinese listed companies in highly water-sensitive industries to examine how product market competition influences corporate water information disclosure by subdividing the product market competition into market competition at the firm level and the industry competition intensity at the industry level.

Findings

The results show that there exists an inverted U-shaped relationship between industry competition and water information disclosure; enterprises with the highest market power in a mildly competitive industry are more willing to voluntarily disclose water information and play an industry benchmarking role. Further tests demonstrate that the relationship between industry competition intensity and water information disclosure is stronger for state-owned enterprises than for private enterprises.

Research limitations/implications

The current water resources regulations in China are relatively lax and the water risk awareness of firms is weak, which may affect the applicability of the results. In addition, water information disclosure research is a relatively new field and a quantitative index system for water information disclosure is still in the exploratory stage. Further developments, including the selection, definition and measuring methods of a water index are required.

Practical implications

The authors developed a new direction of enterprise water management activities from the perspective of market competition. Based on the market conditions in China, the authors also investigated the impact of the ownership type of the enterprises on the relationship between market competition and water information disclosure.

Social implications

The authors suggested that the government should improve laws and regulations and adopt incentive mechanisms to encourage enterprises to implement water resource management. In addition, the government should encourage high market status enterprises to actively fulfill their environmental responsibilities so that the entire industry is encouraged to follow suit.

Originality/value

This study represents an important development in the field of environmental accounting and is the first research on corporate water information disclosure; it also extends the research on the influence mechanisms of market competition on the environmental management practices of enterprises.

Details

Sustainability Accounting, Management and Policy Journal, vol. 11 no. 5
Type: Research Article
ISSN: 2040-8021

Keywords

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