（節(jié)選）內(nèi)部會計(jì)控制相關(guān)的外文翻譯--內(nèi)部控制系統(tǒng)披露—一種可替代的管理機(jī)制

1、<p>　　內(nèi)部控制系統(tǒng)披露—一種可替代的管理機(jī)制</p><p><b>　　塞爾吉奧-貝里塔</b></p><p><b>　　會計(jì)部門</b></p><p><b>　　博科尼大學(xué)</b></p><p>　　根據(jù)代理理論，各種治理機(jī)制減少了投資者和管理者之

2、間的代理問題（Jensen and Meckling，1976； Gillan，2006）。傳統(tǒng)上，治理機(jī)制已經(jīng)被認(rèn)定為內(nèi)部或外部的。內(nèi)部機(jī)制包括董事會及其作用、結(jié)構(gòu)和組成（Fama，1980；Fama and Jensen，1983），管理股權(quán)(Jensen and Meckling，1976)和激勵(lì)措施，起監(jiān)督作用的大股東(Demsetz and Lehn，1985)，內(nèi)部控制系統(tǒng)(Bushman and Smith，2001)，規(guī)

3、章制度和章程條款(反收購措施)和使用的債務(wù)融資（杰森，1993）。外部控制是由公司控制權(quán)市場(Grossman and Hart,1980)、勞動力管理市場（Fama,1980）和產(chǎn)品市場（哈特,1983）施加的控制。</p><p>　　各種各樣的金融丑聞，動搖了世界各地的投資者，公司治理最佳實(shí)踐方式特別強(qiáng)調(diào)了內(nèi)部控制系統(tǒng)在公司治理中起到的重要作用。內(nèi)部控制有助于通過提供保證可靠性的財(cái)務(wù)報(bào)告，和臨時(shí)議會對可能會

4、損害公司經(jīng)營目標(biāo)的事項(xiàng)進(jìn)行評估和風(fēng)險(xiǎn)管理來保護(hù)投資者的利益。這些功能已被的廣泛普及內(nèi)部控制系統(tǒng)架構(gòu)設(shè)計(jì)的廣泛認(rèn)可，并指出了內(nèi)部控制是用以促進(jìn)效率，減少資產(chǎn)損失風(fēng)險(xiǎn)，幫助保證財(cái)務(wù)報(bào)告的可靠性和對法律法規(guī)的遵從（COSO,1992）。</p><p>　　盡管有其相關(guān)性，但投資者不能直接觀察，因此也無法得到內(nèi)部控制系統(tǒng)設(shè)計(jì)和發(fā)揮功能的信息，因?yàn)樗鼈兌际墙M織內(nèi)的內(nèi)在機(jī)制、活動和過程（Deumes and Knechel

5、,2008）。</p><p>　　由于投資者考慮到成本維持監(jiān)控管理其聲稱的（Jensen and Meckling，1976）,內(nèi)部控制系統(tǒng)在管理激勵(lì)信息溝通上的特性，以告知投資者內(nèi)部控制系統(tǒng)的有效性,是當(dāng)其他監(jiān)控機(jī)制（該公司的股權(quán)結(jié)構(gòu)和董事會）比較薄弱，從而為其提供便捷的監(jiān)控（Leftwich et等, 1981）。存在的替代機(jī)制一直是人們在不同公司治理文獻(xiàn)中爭論的話題（Rediker and Seth, 1

6、995；Fernandez and Arrondo，2005），基于威廉姆森（1983年）的替代假說認(rèn)為，特定控制機(jī)制的邊際作用取決于其在公司治理制度的相對重要性。</p><p>　　在本文中，我們認(rèn)為披露內(nèi)部控制系統(tǒng)的特點(diǎn)是在管理者選擇的監(jiān)控機(jī)制時(shí)存在一個(gè)可替代治理機(jī)制。Leftwich（1981）認(rèn)為“管理者選擇一個(gè)監(jiān)控包，監(jiān)測包的組成取決于各種監(jiān)控機(jī)制的成本與效益”（P.59）。</p>&

7、lt;p>　　特別是，我們重點(diǎn)關(guān)注內(nèi)部控制系統(tǒng)和監(jiān)控包的另外兩個(gè)機(jī)制 (公司的所有權(quán)結(jié)構(gòu)和董事會) 間的關(guān)系，根據(jù)有關(guān)文獻(xiàn)（Jensen and Meckling，1976；Fernandez and Arrondo，2005；Gillan，2006）它們在管理行為監(jiān)控方面發(fā)揮相關(guān)作用。我們假設(shè)認(rèn)為，內(nèi)部控制系統(tǒng)的特性取決于激勵(lì)由企業(yè)的股權(quán)結(jié)構(gòu)和董事會發(fā)揮監(jiān)督作用。</p><p>　　因此,我們研究了三年

8、間在四個(gè)不同的證券交易所上市（倫敦、巴黎、法蘭克福和米蘭）160家歐洲公司內(nèi)部控制系統(tǒng)披露程度，通過利用這個(gè)國際范例,我們能夠描繪出不同的體制環(huán)境的某些功能。</p><p>　　我們發(fā)現(xiàn)證據(jù)表明內(nèi)部控制系統(tǒng)披露代替了監(jiān)測方面所發(fā)揮的作用與所有制結(jié)構(gòu)、制度所有權(quán)、在董事會上獨(dú)立董事比例和會計(jì)審計(jì)委員會的專家成員的比率相關(guān)。</p><p>　　我們再加上通過內(nèi)部會計(jì)控制的披露所發(fā)揮的管理作

9、用，采用以往文獻(xiàn)的完整披露架構(gòu)，使我們能夠詳細(xì)地從內(nèi)容和信息管理的程度上內(nèi)制披露上進(jìn)行交流。而公司治理的最佳做法要求披露內(nèi)部控制系統(tǒng)的特性，他們沒有提供管理應(yīng)該披露和披露程度的指令。這樣的管理缺乏指示使內(nèi)部控制系統(tǒng)存在隨意性。</p><p>　　本文提供了實(shí)證支持威廉姆森（1983年成立）在不同的治理機(jī)制下的替代假說，它有相應(yīng)的政策含義。雖然大多數(shù)公司治理研究考慮一個(gè)互補(bǔ)的披露機(jī)制管理采用強(qiáng)化公司治理系統(tǒng)（Ch

10、en and Jaggi，2000；Eng and Mak，2003；Barako 等，2006），的確提供了結(jié)果對比，在本研究中，我們表明內(nèi)部控制系統(tǒng)披露是可替代的其他治理機(jī)制。這意味著更好的治理不一定意味著更高的透明度和更多的披露。公司堅(jiān)持公司治理的最佳做法是提供內(nèi)部控制系統(tǒng)披露信息，這樣當(dāng)其他治理機(jī)制很薄弱可以保證投資者的利益。另一方面，當(dāng)管理體系健全，管理有更少的激勵(lì)內(nèi)部控制體系的廣泛披露，因?yàn)檫@是一個(gè)高成本的活動，而且它會打壓

11、其他治理機(jī)制。</p><p>　　其提供的證據(jù)實(shí)證研究具有重要的政策含義，因?yàn)樗峁┍狙芯肯蚱髽I(yè)和從業(yè)人員提供披露內(nèi)部控制系統(tǒng)作為投資者的一種監(jiān)控機(jī)制的相關(guān)見解。剩下的論文結(jié)構(gòu)如下。第二節(jié)評論的理論背景和發(fā)展研究假設(shè)。研究方法是第三節(jié)中所描述的結(jié)果討論，其次是第四節(jié)。作為結(jié)束語給出了最后一段。</p><p><b>　　理論背景和發(fā)展</b></p>

12、<p>　　根據(jù)相關(guān)公司治理文獻(xiàn)，主要公司治理的內(nèi)部監(jiān)督機(jī)制是董事會，公司的所有權(quán)結(jié)構(gòu)、內(nèi)部控制系統(tǒng)（Gillan，2006）。特別是，內(nèi)部控制系統(tǒng)在保護(hù)投資者的利益發(fā)揮核心作用：可以促進(jìn)效率，減少資產(chǎn)損失風(fēng)險(xiǎn)，幫助保證財(cái)務(wù)報(bào)告的可靠性和對法律法規(guī)的遵從。內(nèi)部控制系統(tǒng)在公司治理中扮演的角色已得到廣泛認(rèn)同。</p><p>　　為了表達(dá)他們的想法和主張，投資者需要獲取監(jiān)控機(jī)制設(shè)計(jì)與運(yùn)行的信息。在研究案例

13、的處理機(jī)制，如股權(quán)結(jié)構(gòu)和董事會有關(guān)結(jié)構(gòu)和組成、類型和地方委員會的組成，會議的次數(shù)等都是可獲取的信息。在其他一些案例中，內(nèi)部控制系統(tǒng)執(zhí)法力度薄弱或不足，如薩班斯法案所要求—向投資者提供內(nèi)部控制體系可能存在差異的相關(guān)信息（Leone，2007）。</p><p>　　不過，對內(nèi)部控制系統(tǒng)的具體信息的收集的確是困難和昂貴的，因?yàn)閮?nèi)部控制體系是在公司中執(zhí)行的一系列活動和過程（Deumes and Knechel，2008

14、；Bronson等，2006）。實(shí)際上，公司治理的最佳做法要求內(nèi)部控制系統(tǒng)的披露，但它們不提供內(nèi)部控制系統(tǒng)具體內(nèi)容的披露。因此，投資者也不太可能了解其性質(zhì)、范圍、程序和內(nèi)部控制質(zhì)量，除非內(nèi)部控制系統(tǒng)披露報(bào)告是由管理者提供的。這樣的披露內(nèi)容和程度取決于公司現(xiàn)行的監(jiān)控包（Leftwich 等，1981；Williamson，1983）。</p><p>　　據(jù)我們所知，內(nèi)部控制系統(tǒng)的特點(diǎn)和功能的披露還沒有引起廣泛的注

15、意。美國薩班斯法案的出臺，內(nèi)部控制系統(tǒng)按相關(guān)要求披露弱點(diǎn)和不足在近幾年日益受到學(xué)術(shù)興趣（among the others see Ash Baugh 等人，2007；Doyle 等人，2007；Leone，2007），只有少數(shù)研究焦點(diǎn)在于內(nèi)部控制披露方面。</p><p>　　Bronson等人，(2006) 探討有關(guān)公司的內(nèi)部控制系統(tǒng)特性的披露它是由薩班斯法案強(qiáng)制執(zhí)行的。他們發(fā)現(xiàn)了一個(gè)積極的可能性之間的關(guān)聯(lián)發(fā)布

16、了內(nèi)部控制管理報(bào)告、公司的治理變數(shù)如審計(jì)委員會會議的次數(shù)、機(jī)構(gòu)股東的百分比。Deumes and Knechel (2008)確定了內(nèi)部控制系統(tǒng)信息披露可以從公司年度報(bào)告中獲得的六個(gè)披露項(xiàng)目的清單。他們發(fā)現(xiàn)，內(nèi)部控制披露指數(shù)，顯示了相關(guān)變量代表的股權(quán)代理成本和負(fù)債代理成本變量。</p><p>　　根據(jù)我們的理論框架,如果內(nèi)部控制系統(tǒng)披露作為一個(gè)替代治理機(jī)制，當(dāng)索賠定價(jià)索賠高（Jensen and Mecklin

17、g, 1976）由于這一事實(shí)，其他已經(jīng)實(shí)行各種監(jiān)測設(shè)備沒有足夠有效限制的代理關(guān)系的成本，我們期望內(nèi)部控制披露，以作為其他監(jiān)督機(jī)制替代，以減少代理沖突的整體強(qiáng)度（Williamson，1983； Fernandez and Arrondo，2005）。</p><p>　　為了檢驗(yàn)該假說，我們關(guān)注的兩個(gè)基本要素的監(jiān)控方案，除了內(nèi)部控制系統(tǒng)披露，還包括股權(quán)結(jié)構(gòu)和董事會。公司治理研究識別三個(gè)代表監(jiān)督作用的所有權(quán)結(jié)構(gòu)包括

18、：（1）大型投資者的監(jiān)督作用；（2）機(jī)構(gòu)投資者的監(jiān)督作用；（3）經(jīng)理層持股對齊的效果。我們期望管理的激勵(lì)機(jī)制對公司內(nèi)部控制系統(tǒng)的披露會被這些監(jiān)察作用發(fā)揮較弱的公司使用。</p><p>　　文獻(xiàn)與實(shí)證指出了關(guān)鍵的大股東所起的監(jiān)督作用。Kang and Shivdasani (1995)檢測到發(fā)現(xiàn)了大股東之間的存在比率和管理層在業(yè)績不佳的公司營業(yè)額呈正相關(guān)。另一方面，一個(gè)分散的所有權(quán)通常關(guān)聯(lián)一個(gè)到較低的監(jiān)測能力和更

19、多的信息對稱性（Shleifer and Vishny， 1986；Zeckhauser and Pound，1990；Barako 等，2006），或者說，由公司的大股東直接監(jiān)督，減少了對替代監(jiān)控機(jī)制的需要。因此，我們希望鼓勵(lì)內(nèi)部控制系統(tǒng)披露的公司的所有權(quán)是分散的。</p><p>　　機(jī)構(gòu)投資者也起到了有關(guān)監(jiān)督作用。雖然上市公司的個(gè)人投資者很少有動力去監(jiān)督管理，他們很容易手私人成本與公共利益的影響（Gross

20、man and Hart，1980），機(jī)構(gòu)投資者所持有的投票權(quán)激勵(lì)他們的監(jiān)督管理作用(Milgrom and Roberts，1992)。此外，機(jī)構(gòu)投資者可以通過信息渠道特權(quán)參與管理，以取得該公司的運(yùn)營披露（Schadewitz and Blevins， 1998）。因此，我們預(yù)期機(jī)構(gòu)投資者的存在，管理有較低的內(nèi)部控制系統(tǒng)披露。</p><p>　　最后代表監(jiān)督作用的所有權(quán)結(jié)構(gòu)就是管理所有權(quán)。人們普遍認(rèn)為管理股權(quán)

21、有助于對齊的管理人員和股東的利益（Jensen and Meckling，1976；Bronson 等， 2006； Deumes and Knechel， 2008），因而減少了在公司代理沖突（Eng and Mak， 2003； Fernandez and Arrondo， 2005 Cheng and Courtenay，2006）。管理股權(quán)減少了監(jiān)控的需要，我們希望鼓勵(lì)內(nèi)部控制系統(tǒng)披露是在管理所有權(quán)較低的情況下。</p&g

22、t;<p>　　董事會在監(jiān)控管理作為股東委托給他們的權(quán)力控制的管理決策的重要作用。以往文獻(xiàn)（Carcelo and Neal，2000；Fernandez and Arrondo，2005； Krishan，2005）確定了董事委員會的能力，進(jìn)行不同的代理管理行為的監(jiān)察：（1）獨(dú)立董事比例；（2）CEO的二元性存在；（3）會計(jì)專家的比率；（4）審計(jì)委員會的監(jiān)控能力。我們期望的更強(qiáng)大董事會監(jiān)控作用、較低內(nèi)部控制系統(tǒng)披露。預(yù)計(jì)

23、獨(dú)立董事、董事會的監(jiān)察活動，可以限制經(jīng)理的機(jī)會主義（Fama，1980； Fama and Jensen，1983）。實(shí)證證據(jù)支持了這個(gè)預(yù)期。Rosenstein and Wyatt (1990)解釋正相關(guān)的股票價(jià)格與一個(gè)新的獨(dú)立董事任命和外部人員在市場的監(jiān)督作用方面發(fā)揮了積極的反應(yīng)信號相關(guān)聯(lián)。大量的研究證實(shí)獨(dú)立董事比例對公司的董事會和公司績效的一個(gè)正面的關(guān)系 （Baysinger and Butler，1985； Goodstein

24、and Boeker，1991； Pearce and Zahra，1992）：獨(dú)立董事在董事會的比率被認(rèn)為是以控制管理代理的行動能力（Fernand</p><p>　　有人認(rèn)為，在一個(gè)單一個(gè)體（CEO二元）的首席執(zhí)行官（決策管理）和主席（決定控制）角色的濃度降低了履行監(jiān)察職能（法瑪和詹森，1983年董事會的有效性；詹森，1993；戈亞爾和公園，2002年）。因此在公司治理最佳實(shí)踐，建議分開的CEO（OECD，

25、2004）的主席一職，認(rèn)為作為CEO的雙重性弱化了董事會監(jiān)督作用，我們預(yù)計(jì)管理層在CEO的雙重性的情況下，將激勵(lì)內(nèi)部控制系統(tǒng)披露。</p><p>　　監(jiān)察董事會成員發(fā)揮作用是增強(qiáng)的種類和深度的能力。董事會成員不僅在對管理績效評價(jià)（通過內(nèi)部和外部報(bào)告），而且在對會計(jì)程序和會計(jì)信息系統(tǒng)對報(bào)告的可靠性的具有影響。此外，在董事會會計(jì)專家??致力于促進(jìn)財(cái)務(wù)報(bào)告的質(zhì)量和ICS（克里希南，2005年）保證系統(tǒng)的改善，因此，我

26、們預(yù)計(jì)，董事會會計(jì)專家增加其監(jiān)管能力，降低了管理激勵(lì)機(jī)制要在ICS披露。</p><p>　　審計(jì)委員會監(jiān)測起著決定性的作用。證實(shí)了前期研究的發(fā)現(xiàn)表明,設(shè)立審計(jì)委員會（AC）通常與影響公司財(cái)務(wù)報(bào)告的質(zhì)量存在積極的作用（Beasley，1999； Bedard 等，2004）。以往的研究表明，企業(yè)財(cái)務(wù)報(bào)告的質(zhì)量是受成員的獨(dú)立性和他們的在財(cái)務(wù)報(bào)告的專業(yè)技能決定的（Beasley，1999；Beasley 等，2000

27、）。對于后一種結(jié)果，作為一個(gè)事實(shí)，AC成員的審計(jì)和會計(jì)專業(yè)知識可以更輕易檢討內(nèi)部審計(jì)文件交互和內(nèi)部審計(jì)人員（Raghunandan 等，2001；Krishnan，2005；Zhang 等人，2007）。因此，我們期望，當(dāng)審計(jì)委員會監(jiān)測能力較高，減少內(nèi)部控制系統(tǒng)的披露。</p><p><b>　　研究方法</b></p><p>　　示例。我們分析了由歐洲金融市場

28、在四個(gè)上市公司披露了ICS：倫敦、巴黎、法蘭克福和米蘭。我們選擇了在受保護(hù)投資者的不同水平，以不同的特征來驗(yàn)證相關(guān)的信息披露行為，以不同的國情不同的國家背景的國際經(jīng)營公司做出了實(shí)例研究，從而使我們的結(jié)果不是從具體的治理環(huán)境得到的。 ICSS是公認(rèn)的符合法律規(guī)定，效益和效率，應(yīng)對董事機(jī)制的最佳實(shí)踐方法。</p><p>　　業(yè)務(wù)。我們的樣本包括了在倫敦，巴黎，法蘭克福和米蘭上市的前40大公司，在市值方面，在2006

29、年12月31日，屬于DowJonesSTOXX600。樣本的每個(gè)企業(yè)都必須包括3年的研究期間（2003-2005）上市測量ICS披露。</p><p>　　所提供的COSO（1992）和最佳實(shí)踐規(guī)范采用的定義為內(nèi)部控制的過程，在不同的組織層次進(jìn)行的，在控制活動目標(biāo)旨在效率和經(jīng)營效益的，會計(jì)信息的可靠性，遵守法律和法規(guī)。在這個(gè)定義的，ICS可以提供有效的防范風(fēng)險(xiǎn)，可以對危及目標(biāo)的實(shí)現(xiàn)提供充分的保護(hù)。由于ICSS是不

30、能直接從外部觀察到的內(nèi)部流程，他們的披露是至關(guān)重要的投資者，使自己對它們的效果評估。</p><p>　　根據(jù)2004年COSO內(nèi)部控制框架，一個(gè)內(nèi)部控制系統(tǒng)可以判斷當(dāng)所有的有效成分的存在和正常運(yùn)轉(zhuǎn)。這種觀點(diǎn)是被認(rèn)同的公司治理方法，ICS包括了其結(jié)構(gòu)和運(yùn)作流程的披露。</p><p>　　為了收集關(guān)于ICSS發(fā)布的披露信息，我們開發(fā)了二維計(jì)劃（分類矩陣 ）。在該計(jì)劃的一個(gè)方面，我們對組件類

31、型的分類與ICS所披露的信息有關(guān)。在該計(jì)劃的其他方面，我們按類型分類：目標(biāo)（防止風(fēng)險(xiǎn)），角色種類，在控制過程企業(yè)內(nèi)部控制機(jī)制的實(shí)施涉及披露的信息。</p><p>　　關(guān)于第一方面，我們采用了2004年提出COSO框架對ICS分類：（1）內(nèi)部環(huán)境；（2）目標(biāo)的設(shè)定及風(fēng)險(xiǎn)偏好—風(fēng)險(xiǎn)承受度；（3）風(fēng)險(xiǎn)識別；（4）風(fēng)險(xiǎn)評估；（5）行動計(jì)劃；（6）實(shí)施行動計(jì)劃；（7）通信、實(shí)時(shí)監(jiān)控。關(guān)于該計(jì)劃的第二個(gè)方面，我們通過199

32、2年COSO框架建議對內(nèi)部控制的進(jìn)行目標(biāo)分類：（1）運(yùn)營的效果和效率；（2）財(cái)務(wù)報(bào)告可靠性；（3）符合法律規(guī)定；（4）維護(hù)資產(chǎn)安全。</p><p>　　關(guān)于角色參與控制過程這一部分我們采取以下的分類：（1）董事會；（2）審計(jì)委員會；（3）內(nèi)部控制主管匯報(bào)；（4）內(nèi)部審計(jì)師； （5）最高管理(首席執(zhí)行官,財(cái)務(wù)總監(jiān),管理者…)；（6）風(fēng)險(xiǎn)委員會—風(fēng)險(xiǎn)經(jīng)理；（7） 其他。</p><p>　　

33、關(guān)于實(shí)施機(jī)制采用，公司為了有效地實(shí)現(xiàn)內(nèi)部控制系統(tǒng)采用以下的分類:（1）審計(jì)委員會的工作機(jī)制；（2）內(nèi)部控制指引和程序；（3）責(zé)任定位； （4）倫理準(zhǔn)則—行為規(guī)范；（5）計(jì)劃和預(yù)算；（6）風(fēng)險(xiǎn)情況的匯報(bào)；（7）信息系統(tǒng)工具；（8）其他活動記錄。</p><p>　　Disclosure on Internal Control Systems</p><p>　　As a Substitute

34、 of Alternative Governance Mechanisms</p><p>　　Sergio Beretta</p><p>　　Accounting Department</p><p>　　Bocconi University</p><p>　　According to agency theory, various go

35、vernance mechanisms reduce the agency problem between investors and management (Jensen and Meckling, 1976; Gillan, 2006). Traditionally, governance mechanisms have been identified as internal or external. Internal mechan

36、isms include the board of directors, its role, structure and composition (Fama, 1980; Fama and Jensen, 1983), managerial share ownership (Jensen and Meckling, 1976) and incentives, the supervisory role played by large sh

37、areholders (Demsetz an</p><p>　　After the various financial scandals that have shaken investors worldwide, corporate governance best practices have stressed in particular the key role played by the internal

38、control system (ICS) in the governance of the firm. Internal control systems contribute to the protection of investors’ interests both by promoting and giving assurance on the reliability of financial reporting, and by a

39、ddressing the boards’ attention on the timely identification, evaluation and management of risks that may</p><p>　　Notwithstanding their relevance, investors cannot directly observe ICSs and therefore cannot

40、 get information on their design and functioning because they are internal mechanisms, activities and processes put in place within the organization (Deumes and Knechel, 2008).</p><p>　　As investors take int

41、o account the costs they sustain to monitor management when pricing their claims (Jensen and Meckling 1976), management have incentives to communicate information on the characteristics of the ICS in order to inform inve

42、stors on the effectiveness of ICS when other monitoring mechanisms (the ownership structure of the firm and the board of directors) are weak, and thereby providing them with the convenient level of monitoring (Leftwich e

43、t al., 1981). The possible existence of</p><p>　　In this paper, we contend that disclosure on the characteristics of ICS is a relevant alternative governance mechanism in the monitoring package selected by t

44、he management. According to Leftwich et al. (1981) “managers select a monitoring package, and the composition of the chosen package depends on the costs and benefits of the various monitoring devices” (p. 59).</p>

45、<p>　　In particular, we focus particular on the relationship between ICS disclosure and two other mechanisms of the monitoring package ( the ownership structure of the firm and the board of directors) that accordin

46、g to literature (Jensen and Meckling, 1976; Fernandez and Arrondo,2005; Gillan, 2006) play a relevant role in monitoring management’s behavior. We posit that incentives for reporting on the characteristics of ICS depend

47、on the supervisory role played by the firms’ ownership structure and boa</p><p>　　We therefore examine the contents and extent of ICS disclosure of 160 European firms listed in four different stock exchanges

48、 (London, Paris, Frankfurt and Milan) on a three-year period (2003 – 2005). By using this international sample, we are able to the depict some features of different institutional environments.</p><p>　　We fi

49、nd evidence that disclosure on ICS is a substitute for the monitoring role played by other governance mechanisms as ownership concentration, institutional ownership, the proportion of independent directors sitting on the

50、 board and the proportion of accounting expert members on the audit committee.</p><p>　　We add to previous literature on the governance role played by disclosure on ICS by adopting a complete disclosure fram

51、ework that allows us to consider in detail the content and extent of information the management discretionarily communicates on the ICS of the firm. While corporate governance best practices ask for the disclosure on the

52、 characteristics of the ICS, they do not provide instructions on what management should disclose and on the extent of such disclosure. Such lack of instructions </p><p>　　This paper offers empirical support

53、for Williamson’s (1983) substitute hypothesis among different governance mechanisms and it has relevant policy implications. While most corporate governance studies consider disclosure as a complementary mechanism manage

54、ment adopts to reinforce the governance system of the firm (Chen and Jaggi, 2000; Eng and Mak, 2003; Barako et al., 2006) and indeed provide contrasting results, in this study we show that disclosure on ICS substitutes f

55、or other governance mech</p><p>　　The evidence provided by the empirical research has important policy implications, because it offers insights to firms and practitioners on the relevance of disclosure on in

56、ternal control systems as a monitoring mechanism for investors. The remainder of the paper is structured as follows. The next section reviews the theoretical background and develops the research hypotheses. The research

57、method is described in section 3, followed by results discussed in section 4. Concluding remarks are presen</p><p>　　Theoretical Background and Hypotheses Development</p><p>　　According to corpo

58、rate governance literature, the main internal monitoring mechanisms are the board of directors, the ownership structure of the firm, and the internal control system (Gillan, 2006). In particular, ICSs play a central role

59、 in the protection of investors’ interests both assuring the reliability of financial reporting and promoting the timely identification, assessment and management of relevant risks that encumber upon the business. The ce

60、ntrality of ICS in corporate governance ha</p><p>　　In order to express their concerns and price their claims, investors need to get information on the design and functioning of monitoring mechanisms. In the

61、 cases of mechanisms like the ownership structure and the board of directors, information concerning structure and composition, type and composition of committees in place, number of meetings and so on, is publicly avail

62、able. In some other cases, the enforcement of reporting on ICS weaknesses or material deficiencies – like those required by t</p><p>　　Nevertheless, specific information on the characteristics of the ICS is

63、indeed more difficult and expensive to gather because ICSs are complex sets of activities and processes carried out internally to the firm (Deumes and Knechel, 2008; Bronson et al., 2006). Indeed, while corporate governa

64、nce best practices require to disclose information on the ICS, they do not provide instruction on the narrative contents of ICS disclosure. Therefore, investors are unlikely to be informed about the nature, e</p>

65、<p>　　At the best of our knowledge, disclosure on the specific characteristics and functioning of ICS has been deserved poor attention. While the introduction of the SOX in the USA, and the related requirement for d

66、isclosure on ICS deficiencies or material weaknesses has increasingly attracted academic interest in recent times (among the others see Ash Baugh et al., 2007; Doyle et al., 2007; Leone, 2007), only few studies focused o

67、n the specific characteristics of ICS disclosure.</p><p>　　Bronson et al. (2006) examine firm characteristics associated to disclosure on ICS before it was made mandatory by SOX. They find a positive associa

68、tion between the likelihood of issuing a management report on internal control and corporate governance variables like the number of audit committee meetings and the percentage of institutional shareholders. Deumes and K

69、nechel (2008) identify a list of six disclosure items that capture the ICS information generally available in the annual reports of </p><p>　　According to our theoretical framework, if disclosure on ICS acts

70、 as an alternative governance mechanism, when the pricing of claims is high (Jensen and Meckling, 1976) -due to the fact that the other various monitoring devices already in place are not effective enough to limit the co

71、sts of the agency relationship - we expect that disclosure on ICS acts as substitute for other monitoring mechanisms in order to reduce the overall intensity of agency conflicts (Williamson, 1983, Fernandez and Arro</

72、p><p>　　In order to test this hypothesis, we focus on two fundamental elements of the monitoring package, besides the disclosure on ICS: the ownership structure and the board of directors. Corporate governance

73、studies identify three proxies for the supervisory role of the ownership structure: i) the supervisory role of large investors, ii) the monitoring role of institutional investors and iii) the alignment effect of manageri

74、al ownership. We expect that the incentives for management to disclose informa</p><p>　　Literature and empirical evidences attribute to large shareholders a key supervisory role. Kang and Shivdasani (1995) d

75、etected a positive association between the presence of large shareholders and management’s turnover in underperforming firms. On the other side, a disperse ownership is usually associated to a lower monitoring ability an

76、d greater information symmetries (Shleifer and Vishny, 1986; Zeckhauser and Pound, 1990; Barako et al. 2006).Alternatively said, the direct supervision performed</p><p>　　Institutional investors also play a

77、relevant supervisory role. While individual investors in public firms have little incentive to monitor management as they are exposed to private costs against which there are public benefits (Grossman and Hart, 1980), in

78、stitutional investors have higher incentives to play an active monitoring role on the management because of their large voting power (Milgrom and Roberts, 1992). Moreover, institutional investors can access to management

79、 through privileged info</p><p>　　The last proxy for the supervisory role of the ownership structure is the managerial ownership. It is generally accepted that management’s stock ownership contributes to the

80、 alignment of managerial and shareholders’ interests (Jensen and Meckling, 1976; Bronson etal., 2006; Deumes and Knechel, 2008), thus reducing the agency conflicts inside the firm (Eng and Mak, 2003; Fernandez and Arrond

81、o, 2005 Cheng and Courtenay, 2006). As managerial stock ownership reduces the need for monitoring, we expec</p><p>　　Boards of directors play a crucial role in monitoring management as shareholders delegate

82、to them the power to control managerial decisions. Previous literature (Carcelo and Neal, 2000;Fernandez and Arrondo, 2005; Krishan, 2005) identifies different proxies for the capability of the board to monitor manageria

83、l behavior : i) the proportion of independent directors, ii) the presence of CEO duality, iii) the presence of accounting experts and iv) the monitoring ability of the audit committee. We ex</p><p>　　It has

84、been argued that concentration of the roles of CEO (decision management) and chairman (decision control) in one single individual (CEO duality) reduces the board’s effectiveness in performing its monitoring function (Fam

85、a and Jensen, 1983; Jensen, 1993;Goyal and Park, 2002). Accordingly best practices in corporate governance recommend to separate the role of the chairman from that of the CEO (OECD, 2004).As CEO duality weakens the monit

86、oring role of the board, we expect that management wi</p><p>　　The monitoring role played by board members is enhanced by the variety and deepness of their competences. The accounting expertise is relevant f

87、or board members not only in the evaluation of management performance (through internal and external reporting), but also in appreciating the impact of accounting procedures and accounting information systems on the reli

88、ability of reporting. Moreover, accounting experts on the board promote the improvement of the systems devoted to quality assurance of f</p><p>　　The audit committee plays a decisive monitoring role. Finding

89、s from previous studies suggest that the establishment of an Audit Committees (AC) generally has positive influence on the quality of corporate financial reporting (Beasley, 1999; Bedard et al., 2004). Previous studies s

90、uggest that the quality of financial reporting is influenced by the independence of AC members from management and by their expertise in financial reporting (Beasley, 1999; Beasley et al 2000). Regarding the latter find&

91、lt;/p><p>　　Research Method</p><p>　　Sample. We analyze the disclosure on ICS made by firms listed in four European financial markets: London, Paris, Frankfurt, and Milan. We opted for an internati

92、onal sample made of firms operating in different national contexts characterized by different levels of investors protection in order to verify if different disclosure behaviors are associated to different national conte

93、xts, thus making our results more robust as not dependent from specific governance contexts. ICSs are recognized by the </p><p>　　Our sample consists of the first 40 largest firms listed on the London, Paris

94、, Frankfurt, and Milan markets, in terms of market capitalization at 31.12.2006, belonging to the DowJonesSTOXX600. To be included in the sample, each firm had to be listed for the 3 years period of the study (years 2003

95、 – 2005).</p><p>　　Measurement of ICS Disclosure. The definition provided by the COSO (1992) and adopted by the cited codes of best practice sets internal control as a process, carried out at various organiz

96、ational levels, aimed at providing reasonable certainty regarding the achievement of the objectives of efficiency and effectiveness of operating activities, reliability of accounting information, compliance with laws and

97、 regulations. In the light of this definition, an ICS is effective when provides adequate pr</p><p>　　According to 2004 COSO Framework, an ICSs can be judged effective when all its components are in site and