Research On Internal Control Information Disclosure And Cost Of Equity Capital

The cost of equity capital plays an important role in the development of capital market and is one of the most core concepts in modern financial management.It is widely used in the fields of enterprise investment,financing,dividend decision,accounting valuation and performance evaluation.The Francis Turner Palgrave points out that the cost of capital is the expected rate of return demanded by commercial assets investors.Managers who aim to maximize value use the cost of capital as the discount rate or minimum rate of return on investments.In other words,the cost of equity capital is essentially an opportunity cost.The reason why this problem is important lies in its significant impact on improving the efficiency of the stock market and optimizing the allocation of resources,and these significant effects are especially significant for China's capital market under the background of mixed ownership economy.Therefore,how to reduce the company's cost of equity capital has been one of the focal points of the theoretical and practical circles.One of the preconditions to reduce the cost of equity capital is to ensure the effective operation of the capital market,and the preconditions to ensure the efficient operation of the capital market is to disclose information true,reliably,completely and timely,especially internal control information disclosure.The internal control information is formed by the construction and operation status of each part of the internal control of listed companies,which is an important part of the non-financial information,and it has all the characteristics of non-financial information,such as the extensiveness in space,the continuity in time,the record in non-monetary form,and the more qualitative and authentic content.Therefore,the internal control information disclosed by listed companies is the important basis for investors to measure the operating conditions and performance of enterprises,which is more and more valued and favored by investors.In other words,when investors have mastered the internal control information,they have mastered the scientific basis for making correct investment decisions.Therefore,it is of great significance to improve the internal control information disclosure system of listed companies for improving corporate performance,protecting investors' interests and reducing the cost of capital.In addition,due to China's specific political and economic system and the special background of mixed ownership economy,state shareholders are the most powerful controlling shareholders,which have a significant impact on the internal control and disclosure of internal control information of the invested enterprises.From the perspective of internal control defect information and security market investment risk,this paper intends to comprehensively and deeply study the correlation between internal control information disclosure and cost of equity capital of listed companies combined with the heterogeneity of shareholders.Chapter 5 uses the analytic hierarchy process and entropy weight method to construct D index of internal control information disclosure quality evaluation of Chinese listed companies during the mandatory disclosure phase(2013-2017)according to the quality characteristics of accounting information,five components of internal control,two core characteristics of internal control information and four unique attributes,and on this basis to quantitatively analyze internal control information disclosure quality of China's main board listed companies.Chapter 6 divides internal control defects into three stages: existence,disclosure and correction,summarizes and analyzes the status quo of each stage of internal control defects in Chinese listed companies,and empirically studies the direct influence of internal control information disclosure on cost of equity capital by combining the manifestation of internal control defects and shareholder heterogeneity variables.Chapter 7takes relevant data of listed companies from 2013 to 2017 under the background of economic reform to empirically study the indirect influence of internal control information disclosure quality on cost of equity capital from two regulatory factors of stock investment risk and stock liquidity combined with shareholder heterogeneity variables.Through a systematic discussion on the relationship between internal control information disclosure and cost of equity capital,the paper reaches the following conclusions:(1)Based on D index of internal control information disclosure quality evaluation of Chinese listed companies to analyze the overall quality level of internal control information disclosure shows that under the stage of mandatory disclosure,The total quantity and the overall quality level of internal control information disclosure of Chinese listed companies are on the rise,and compared with the internal control audit report,investors pay more attention to the internal control evaluation report disclosed by listed companies.However,some listed companies still need to improve internal control information disclosure quality,which is mainly reflected in the lack of completeness and relevance.(2)Analyzing the direct impact of internal control information disclosure on cost of equity capital based on internal control defects shows that from 2013 to 2017,each stage of internal control defects of listed companies not only showed a good development trend,but also reflected the existing problems;In addition,in existence stage,the existence of internal control defects in listed companies is significantly positively correlated with the cost of equity capital;In disclosure stage,the disclosure of internal control defects is significantly negatively correlated with the cost of equity capital in the listed companies with internal control defects;The manifestation of internal control defects disclosure will influence the cost of equity capital,and companies that disclose financial reporting internal control defects have a lower cost of equity capital;In correction stage,correction of internal control defects is significantly negatively correlated with the cost of equity capital;the manifestation of internal control defects corrected will influence the cost of equity capital and companies that correct financial reporting internal control defects have a lower cost of equity capital;Shareholder heterogeneity will influence the correlation between the manifestation of internal control defects corrected and the cost of equity capital.Compared with state-owned enterprises,non-state-owned enterprises that correct financial reporting internal control defects have lower cost of equity capital.(3)Analyzing the indirect influence of internal control information disclosure on cost of equity capital based on stock investment risk shows that internal control information disclosure quality of listed companies is significantly negatively correlated with stock investment risk;The risk of stock investment is significantly positively correlated with the cost of equity capital;The increase of stock investment risk will weaken the negative correlation between internal control information disclosure quality and the cost of equity capital;The mutual exclusion effect caused by stock investment risk is not influenced by the heterogeneity of shareholders,and there is no significant difference between state shareholder holding enterprises and non-state shareholder holding enterprises.(4)Analyzing the indirect influence of internal control information disclosure on cost of equity capital based on stock liquidity shows that internal control information disclosure quality of listed companies is significantly positively correlated with stock liquidity;The stock liquidity is significantly negatively correlated with the cost of equity capital;The increase of stock liquidity will enhance the negative correlation between the internal control information disclosure quality and the cost of equity capital;The complementary effect caused by stock liquidity is influenced by the heterogeneity of shareholders,and compared with "state shareholder" holding enterprises,the complementary effect of stock liquidity is more significant in "non-state shareholder" holding enterprises.