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We find that firms reporting internal control material weakness (ICW) under Section 404 of Sarbanes-Oxley Act have 13% lower valuation than non-ICW firms based on Tobin’s q. This valuation difference is mainly driven by stock underperformance of more than 13% during the year before ICW disclosure. Those ICW firms that remedy the internal control weakness in the year after disclosure have much better stock performance compared to those ICW firms who fail to remedy ICW during the same period. We further show a better stock performance in the year before disclosure if a SOX 404 ICW firm has prior SOX 302 ICW disclosure more than one year earlier. All these results are consistent with the hypothesis that the equity market has reflected the negative information associated with SOX 404 ICW reports before the actual disclosures are made. Additional analysis suggests that the market cannot independently reflect the ICW information. More likely, the activities related to the preparation of ICW disclosure generate new information that is reflected in the stock prices.

Ethics is an important determinant of good governance. However, ethical value is hard to observe, and selecting employees and officials based on ethics can be a challenging task. Ancient Chinese philosophy suggests that poems reflect their authors’ “inner purpose.” During the Tang, one of the most prosperous dynasties in China, the government had a practice of selecting government officials based on the artistic quality of their poems. We thus hypothesize a positive association between the quality of poetry and its author’s ethics. Using historical archival records of civil service officials’ ethics and the artistic quality of their poems during China’s Tang Dynasty, we find a positive association between poetry and ethics and thus preliminary circumstantial evidence that ethical people can be a basis for good organizations.

The association with information and capital market has long been thought as a potential research field for the Accounting and Finance, which are considered as one of the Puzzles-whether due to transfer the future performance effectively or market feedback by message itself? From this article about prospective financial information, market reaction to additional (explicit implicit) information had been verified using regression model. By virtue of excess turnover rates, it aims to analyze, test and interpret signaling effect. Additional information will be found to burst market reaction while I look at two competing hypotheses to explain this reaction. The first hypothesis is signaling hypothesis that assumes the insiders of information advantage to prevent market failure, and reduce information asymmetry; the second competing hypothesis assumes that the market transmits to users their valuation of the company. The main finding is to identify two conclusions: first, that cumulative abnormal return was significantly related with explicit additional information rather than implicit information. Second, as China market's unique system or institute, the two alternative hypotheses can not be fully compatible, but no absolute exclusion. Before the announcement market feedback effect is probably existed, but the signaling hypothesis has a comparative advantage, is superior to support market feedback hypothesis.

Since China's capital market is facing the "emerging & transition" development environment, as the share-split structure reform is gradually improving, the confidence of investors of listed companies is slowly restored. Therefore, improving and perfecting the system of information disclosure of listed companies be one of the most important tasks to restore the credibility and revive the market. Certainly, historical financial statement may also help an investor assess an entity's future cash flow and investment value, but much attention has been directed to measurement and disclosure of pro forma financial information. This professional information may take the form of forecasts, projections, feasibility studies and others. This paper is devoted to empirical research to examine. On the basis of extraction from domestic and foreign literatures - earning forecast model, which reveals some variables to predict the prospective financial information measurement, it develops forecast antecedents, characteristics, consequences and uncertainty & risk determinants framework. Beginning by descriptive analysis of listed companies in China for nearly four-year samples of these variables, and through factor analysis, non-parameter test and multivariate regression model for the analysis and empirical testing, it certifies pro forma financial information measuring determining and evaluating framework, and takes its utility.