Media Coverage And Internal Control Weakness Identification Standards

At this stage,the important role of internal control in improving risk prevention and control ability and enhancing the level of value creation is beyond doubt.In the establishment,perfection,evaluation and audit of internal control of listed companies,the identification of internal control weaknesses is the most basic and core issues.Internal control weakness identification standards are the concrete basis for the ideltification of internal control weaknesses,which are of great significance for unbiased evaluation of the effectiveness of internal control.However,for executives,the identification and disclosure of internal control weak:nesses is equivalent to "self-denial",which may have a negative impact on their salary performance and professional reputation.Moreover,at the present stage,the internal control norm system of our country gives enterprises the discretion to determine the standard of internal control defects,and there are no clear guidelines in the relevant norms.In this context,enterprises may use their discretion to manipulate the identification standard of internal control defects and implement opportunistic behavior.In recent years,media coverage as the "fourth power" has become a hot topic for scholars,and the governance effect of media coverage has also been generally recognized.Some scholars have found that media coverage can significantly improve the effectiveness of internal control.So,as a key link in evaluating the effectiveness of internal control,can media eoverage affect the identification criteria of internal control defects in enterprises?Does this impact differ between different content and different types of media coverage?What is the specific path for the media to pay attention to this external regulation for the identification of internal control defects?Are there specific Constraints for the media to focus on the governance effect?In view of this,this paper first analyses the implementation environment of internal control normative system and the current situation of internal control system Construction in China.Then,based on the principal-agent theory,reputation theory and agenda setting theory,the research hypothesis is put forward.The paper examines whether and how media coverage affects the identification criteria of internal control defects in enterprises from three dimensions:the nurnber of indicators,the level of importance and the quality of disclosure.At the same time,from the perspective of heterogeneity of media coverage,this paper subdivides the content and types of media coverage,and discusses the differences between media coverage governance effects in different media emotions and different media types.Furthermore,by synthesizing the internal and external governance mechanisms,this paper examines the intermediary channels through which media coverage acts on the identification criteria of internal control defects in enterprises from the levels of internal formulators and external supervisors.Based on the imperfect development of China's capital market,this paper discusses the regulatory effect of investors' information environment.The conclusions are as follows:Firstly,media coverage has a positive impact on the identification standard of internal control defects.The higher the media coverage is,the more financial indicators are used when enterprises formulate internal control defect identification standards,and the lower the importance level is.This governance effect does not differ between the traditional media represented by newspapers and the new media represented by the Internet.The media coverage in the previous period has a positive impact on the change of the importance level of the internal control defect identification standard.The higher the media coverage last time,the more companies tend to adjust their importance level in a strict direction.There are differences in the impact of media coverage of different content on the identification standard of internal control defects.Compared with neutral reports,non-neutral reports conveying media emotions have a more significant impact on the number and importance of internal control deficiency identification criteria.There are differences in the impact of different types of media coverage on the identification criteria of internal control defects.Compared with other newspapers,the eight major newspapers have a more significant impact on the number of internal control defect identification criteria.In the eight major newspapers,compared with market orientation,policy-oriented media coverage has a more significant impact on the number of indicators of internal control defects.Secondly,the function of the board of directors is an intermediary variable between the media coverage and the internal control defect identification standard.The media pays attention to the number and importance of the indicators that affect the recognition standard of internal control defects by promoting the function of the board of directors.From the external supervisor level of the internal control defect identification standard,administrative supervision is the intermediary variable between media coverage and the internal control defect identification standard.The media pays attention to the importance of influencing the recognition standard of internal control defects by triggering administrative supervision.media coverage of different internal controls has different effects on the functions of the board of directors and administrative supervision.Negative and neutral reports have a positive relationship with the functions of the board of directors and administrative supervision,but this relationship does not exist in positive reports.Lastly,the information environment of institutional investors can negatively regulate the relationship between media coverage and the identification criteria of internal control defeets.There is no difference between the new media represented by the Internet and the traditional media represented by newspapers.The information environment of individual investors can negatively regulate the relationship between the attention of traditional media represented by newspapers and the identification criteria of internal control defects in enterprises.The worse the information environment faced by individual investors,the stronger the impact of traditional media coverage on the identification criteria of internal control defects in enterprises.The information environment of institutional investors can negatively regulate the intermediary effect of board functions,which is mainly reflected in the first half of the intermediary effect.Institutional investors can adjust the relationship between media coverage and the functions of the board of directors,and then adjust the influence of media coverage on the importance level of corporate internal control defect identification standards.The worse the information environment facing institutional investors,the stronger the role of media coverage in promoting the functions of the board of directors.Fourthly,the information environment of individual investors can negatively regulate the intermediary effect of board functions,which is mainly reflected in the first half of the intermediary effect.Individual investors can adjust the relationship between media coverage and the functions of the board of directors,and then adjust the impact of media coverage on the number of standard indicators for identifying internal control defects in enterprises.The worse the information environment faced by individual investors,the stronger the role of media coverage in promoting the functions of the board of directors.The anticipated innovation points are as follows:Firstly,different from the existing literature,which takes the evaluation of the effectiveness of internal control as the premise and studies the relationship between media coverage and internal control,this paper extends the research content to the core link of the evaluation of internal control effectiveness,and studies the impact of media coverage on the identification standard of internal control defects in enterprises from three dimensions:the number of indicators,the level of importance and the quality of disclosure.At the same time,in view of the special impact of media types and content,this paper further subdivides media coverage into traditional media and emerging media,neutral and non-neutral reports,authoritative media and non-authoritative media,examines the effect differences between media coverage in different types and different content media reports,and deepens the understanding of the relationship between media coverage and internal control.Secondly,unlike the existing literature which only examines the main effect between media coverage and internal control of enterprises,this paper explores the intermediate mechanism of media coverage acting on internal control defect identification criteria from the two levels of formulating internal formulator and external supervisor,and opens up the"black box" between media coverage and internal control of enterprises.At the same time,this paper further explores the external Constraints that influenee the identification criteria of internal control defects,and enriches the research framework of media governance effect.Lastly,different from previous literatures,which focus on internal control flaws from internal perspective,this paper incorporates the functions of the board of directors and media concerns into the same analytical framework.It theoretically analyses and empirically examines the impact of media concerns on corporate internal control flaws by influencing the functions of the board of directors,and the existence of this effect in different types and contents of media concerns.Differences.This paper integrates internal governance and external mechanism to study the influencing factors of internal control defect identification standards,so as to avoid the shortcomings caused by the separation of the two,and expand the research in this field.