The Association between Earnings Persistence and Internal Control Quality: Evidence from China

Lin, Mei; Yu, Po-Hsiang

doi:10.12735/jfe.v3i4p38

Cited by 9 publications

(4 citation statements)

References 66 publications

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“…The DIB index, annually published since 2008, is a composite index constructed on five dimensions of IC: IC strategies, operational efficiency, financial reporting quality, legal compliance and asset safety (DIB Internal Control and Risk Management Database, 2017). The IC deficiencies reported by listed companies are also incorporated into the index to improve its rigor (Li, Shu, Tang and Zheng, 2017; Li, Wang and Wang, 2017; Lin and Yu, 2015). It reflects the IC information based on the listed firm’s IC disclosure reports, IC assessment reports and auditing/assurance reports (Li, 2015).…”

Section: Research Design and Sample Selectionmentioning

confidence: 99%

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Abnormally long audit report lags and future stock price crash risk: evidence from China

Habib

Huang

2019

IJMF

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Purpose Although a substantial body of literature investigates the determinants of audit report lag (ARL), scant empirical evidence exists on the consequences of ARL. The purpose of this paper is to examine the association between abnormally long ARL and future stock price crash risk. Design/methodology/approach This quantitative study employed a large scale (14,445 firm-year observations) of annual financials, audit and ownership information for the Chinese listed companies during 2002–2013 which were retrieved from the China Stock Market and Accounting Research database. Findings This study finds evidence that abnormally long ARL increases the risk of a future stock price crash. Furthermore, the study finds that this adverse consequence is more pronounced for firms with a poor internal control environment. Practical implications Recently literature started to explore the consequences of abnormal ARL such as going concern audit opinion and restatements in the subsequent periods. This paper reveals that abnormal ARL has consequences for investor wealth losses as well. This is relevant in China, where the ongoing economic growth has attracted, and will continue to attract, a growing body of domestic and international investors. Understanding what factors could expose investors to wealth losses is of paramount importance for allocating their scarce capital. Originality/value This study extends the scant literature on the consequences of ARL, and provides useful insights for the Chinese regulatory authorities when considering the appropriateness of the current filing deadline for listed firms.

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Section: Research Design and Sample Selectionmentioning

confidence: 99%

“…For example, Li (2015) reported an average score of 672.2 for the sample period 2009–2012. Lin and Yu (2015) documented an average IC score of 685.46 for the sample period 2008–2011.…”

Section: Notesmentioning

confidence: 99%

Abnormally long audit report lags and future stock price crash risk: evidence from China

Habib

Huang

2019

IJMF

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“…According to Penman & Zhang (2002) and, Lin & Yu (2015), earnings persistence is increased when a higher profit margin is matched with lower expenses but where unjustifiable abnormal operating expenses exist, the level of earnings persistence diminishes. "More persistent Earnings are more sustainable and are of high quality.…”

Section: Literature Review 21 Earnings Persistencementioning

confidence: 99%

“…It also confirmed higher persistency of the distributed income. Lin & Yu (2015) investigated the association between internal control quality and earnings persistence. 5059 observations were collected from A-share corporations listed on the Shanghai Stock Exchange.…”

Section: Empirical Reviewmentioning

confidence: 99%

The Influence of Earnings Persistence on Financial Sustainability of Commercial Banks in Nigeria

Jeremiah,

Akpanuko

2024

AKSUJACOG

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The thought-provoking misdemeanour of some commercial banks nose-diving into a financial crisis, even after presenting seemingly good yearly performance reports, motivated this study. Thus, the study was carried out to examine the relationship between earnings persistence and the financial sustainability of commercial banks in Nigeria. This relationship was examined after controlling for leverage, interest rate and firm size of the commercial banks. The ex-post facto research design was adopted in the study. Data were obtained from the annual reports of 12 selected, listed commercial banks in Nigeria from 2012 to 2022. The multiple regression technique was used to test the hypothesis of the study. The results of the analysis revealed that there is a significant positive relationship between earnings persistence and the financial sustainability of commercial banks in Nigeria (t = 4.318, p = 0.000, p < 0.05). Based on this finding, it was recommended that commercial banks should strive to enhance their earnings persistence by increasing their operational efficiency.

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Corporate digital transformation, governance shifts and executive pay-performance sensitivity

Li,

Xie,

Chen

et al. 2024

International Review of Financial Analysis

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The Association between Earnings Persistence and Internal Control Quality: Evidence from China

Cited by 9 publications

References 66 publications

Abnormally long audit report lags and future stock price crash risk: evidence from China

Abnormally long audit report lags and future stock price crash risk: evidence from China

The Influence of Earnings Persistence on Financial Sustainability of Commercial Banks in Nigeria

Corporate digital transformation, governance shifts and executive pay-performance sensitivity

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