The peer effects on disclosure of corporate internal control weakness

Abstract

This paper explores the peer group effect of enterprises’ disclosure of internal control defects. We examine listed companies that disclose internal control evaluation reports in China from 2015 to 2022. Our findings indicate a peer of enterprise internal control defects. Furthermore, less competition in the product market increases the likelihood of imitation behavior regarding the disclosure of internal control defects in the same region and industry. The severity of such behavior in these regions also increases.