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

The Benefits of Disclosing Internal Control Weaknesses: Evidence from Taiwanese Banks 208 Appendix De fi nitions of Variables Variable Definition ICW = 1 if bank i discloses a nonzero value of ICW in year t and 0 otherwise. SIZE = The log of total assets (in millions) of bank i at the end of year t . ln(AGE) = The log of the age of bank i in year t . AGGLOSS = 1 if bank i reports a loss for continuing operations in year t and t -1 and 0 otherwise. ROA = Net income of bank i in year t , scaled by total assets at the end of year t . sd(ROA) = Standard deviation of ROAs of bank i measured within year t -1, t -2, and t -3. DIV_ASSET = 1 minus the absolute value of “ loans minus other profit-generating assets, scaled by total profit-generating assets. ” DIV_REV = 1 minus the absolute value of “ interest revenues minus noninterest revenues, scaled by total revenues. ” FOREIGN = 1 if bank i reports any foreign currency adjustments higher than the median value of the adjustment in year t and 0 otherwise. EXGROWTH = 1 if the revenue growth of bank i is in the top quintile among all banks in year t . Revenue growth is calculated as the difference of interest revenues and communion revenues between year t and t -1 scaled by revenues in year t -1 and 0 otherwise. BDSIZE = The log of the number of board directors of bank i in year t . BDMGER = Percentage of managers who are also directors on the board of bank i in year t . BDHD = Percentage of shares held by the board directors of bank i in year t . MGERHD = Percentage of shares held by the managers of bank i in year t . MODEV = Ratio of the percentage of controlling seats to the percentage of controlling shares. BDPLEDGE = Percentage of shares pledged by the board directors of bank i in year t . BLOCKHD = Percentage of shares held by the blockholders of bank i in year t . LEGALHD = Percentage of shares held by legal persons in year t . GOVHD = 1 if the bank i ’ s shares are owned by the government and 0 otherwise. MV = Market value of bank i at the end of year t , scaled by total assets at the end of year t -1. BV = Book value of bank i at the end of year t , scaled by total assets at the end of year t -1. NI = Net income of bank i in year t , scaled by total assets at the end of year t -1. ZSCORE = The log value of ROA plus capital ratio divided by sd(ROA) . IMR = Inverse Mills ratio measured by Heckman two-stage model. IAUBOD = 1 if internal audit unit of bank i directly reports to the board of directors in year t .