臺大管理論叢 NTU Management Review VOL.30 NO.2

197 NTU Management Review Vol. 30 No. 2 Aug. 2020 4.4 Additional Analysis 4.4.1 Inclusion of Internal Audit Quality Variables Because this study posits that the ICW disclosures may reveal the level of effort of banks in assessing and reporting their ICWs, other proxies that might capture the degree of such efforts may also be considered. Prior studies argue that the internal audit unit assists management in maintaining strong internal controls and would improve the quality of external auditors’ work (Schneider, 1985; Pizzini, Lin, and Ziegenfuss, 2015). In this section, the qualities of internal audit in the main regression are included. Lee, Hsu, and Tang (2008) use two measures as proxies for internal audit quality. The first is whether the internal audit unit directly reports to the board of directors and, if so, the unit is considered capable of independently performing internal control tasks. The second is the number of staff working in the internal audit unit; if the number is relatively low, the quality of the internal audit may be lower because of the high workload. Moreover, if the internal audit unit meets with the independent directors (or supervisors) more frequently, this may indicate that the firm takes its internal control activities more seriously. In summary, three measures are used as proxies for the quality of internal auditing, and included in the main regression to ascertain whether the effect of the ICW disclosures is affected. Specifically, IAUBOD = 1 if the internal audit unit of bank i directly reports to the board of directors in year t . ln(IAUNB) is the log of the number of employees working in the internal audit unit of bank i in year t . IAUMEET is the number of meetings in which the internal audit unit has discussions with the independent directors (or supervisors) of bank i in year t . Panel A of Table 7 describes the coefficients of new variables when we perform model (1). Panel B presents the results with internal audit quality included in the analysis. With the quality of internal auditing considered, the coefficient of ICW remains significantly positive ( p < 0.05). The result is consistent with the main test.