What is the Effect of China's SOX-Act?

Posted: 26 Jan 2010 Last revised: 9 Feb 2010

See all articles by Liyan Wang

Liyan Wang

Peking University - Guanghua School of Management

Jidong Zhang

Winona State University

Date Written: November 1, 2009

Abstract

In this paper in June 2008 the Ministry of Finance, Securities and Futures Commission, the Audit Commission, China Banking Regulatory Commission, China Insurance Regulatory Commission jointly issued the first basic norms of internal control, as well as the basic norms will be held July 1, 2009 starting first in the purposes of the event within the framework of a listed company as the background, hand-collected in 2008 in accordance with specifications listed companies have implemented a system of internal control reporting audit of a sample to study the internal control reporting audit system effects. The results show that China's so-called Sarbanes-Oxley Act, the implementation of the bill is different from the United States in 2002, displayed a significant positive effect. The internal control reporting audit system is not only significantly improved the company's audit opinion on the quality of the internal control report also found that the audit system of the existing penalty system has significant substitution effect, can reduce the cost of enhancing the regulatory effects of regulation; and internal control reporting audit firm and financial reporting of the separation of auditing firms, making the internal control reporting audit system effect is more significant, for the punishment mechanism of the substitution effect becomes more pronounced.

Keywords: Internal Control SOX Auditing Firm

JEL Classification: M41

Suggested Citation

Wang, Liyan and Zhang, Jidong, What is the Effect of China's SOX-Act? (November 1, 2009). Available at SSRN: https://ssrn.com/abstract=1542589

Liyan Wang

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

Jidong Zhang (Contact Author)

Winona State University ( email )

Winona, MN 55987
United States

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