Research On The Effect Of Institutional Isomorphism Of Internal Control Defects Identification In Listed Companies

Since the enactment of the SOX Act of 2002 in the United States,the legislative process of internal control has been gradually accelerated globally.From 2008,the Basic Norms for Enterprises Internal Control began to require enterprises to formulate standards for internal control defects identification.To 2014,No.21 of the Rules for the Compilation of Information Disclosure of Public Securities Companies:the General Provisions for Annual Internal Control Evaluation Report specified the details of the standards for the internal control defects identification.It can be seen that the developing internal control norm system in China aims to improve the information content of internal control evaluation reports of listed companies.However,from the perspective of practice,the identification standards of internal control defects determined by listed companies in China show the characteristics of convergence,and there are some problems such as inadequate disclosure of identification standards of internal control defects,and the low efficiency of information disclosure.However,the existing research neglects the decision-making of the internal control defects of listed companies.In view of the institutional pressure faced by the identification of internal control defects of listed companies,including the compulsory pressure from the continuous improvement of the internal control norm system,the specialized normative pressure from the relevant media or associations,and imitation pressure caused by many uncertainties which due to the principle of defect identification norms,this paper introduces the new institutionalism theory of "institutional homogeneity" to explain the convergence of information disclosure standards for identification of internal control defects of listed companies in practice.And based on the background of China’s internal control system,this paper empirical test whether there exists " institutional homogeneity" in the identification of internal control defects of listed companies when faced with institutional pressure in the institutional organizational environment?And what kind of effect will this behavior bring to the listed companies?Answering these questions theoretically and experimentally is of great theoretical and practical significance for regulators to improve the system of internal control defects identification and promote listed companies to effectively identify internal control defects.By combining normative research with empirical research,this paper studies the"institutional isomorphism" behavior and its effects of the internal control defects identification in listed companies.Firstly,it combs the new institutionalism theory to provide a theoretical basis for the existence motivation of the "institutional isomorphism" of the internal control defects identification of listed companies.At the same time,it combs the development process of the system and norms related to the internal control defects identification at home and abroad,investigates and analyses the status of information disclosure of the identification standard of internal control defects,then,it analyses the behavioral characteristics of the internal control defects identification,which provides a realistic basis for the study of the internal control defects identification of Listed Companies in China.Secondly,it empirical tests and confirms the existence of the identification of "institutional isomorphism" and identifies the objects of the identification of "institutional isomorphism".Finally,based on the perspective of violation penalty,enterprise development and internal control audit,this paper empirically analyzes the"institutional isomorphism" effect of the internal control defects identification,and examines which factors will affect the "institutional isomorphism" effect of the internal control defects identification.The research finds that:(1)Due to the influence of compulsory pressure,normative pressure and imitative pressure,the internal control defects identification of listed companies exists "institutional isomorphism",which is identical to the average level of the same industry and defensive.(2)Based on the perspective of penalty for violation,it verifies that "institutional isomorphism" of internal control defects identification has regulatory effect.The higher degree of "institutional isomorphism" of internal control defects identification of listed companies,the lower possibility of listed companies being punished for violation,and the lighter degree of severity of violations.(3)Based on the perspective of enterprise development,it verifies that"institutional isomorphism" of internal control defects identification has the effect of benefit and risk suppression.The higher degree of "institutional isomorphism" of internal control defects identification,the lower the performance of listed companies and the lower the risk of enterprises.(4)From the perspective of internal control audit,"institutional isomorphism" of internal control defects does not have information effect."institutional isomorphism" of the internal control defects identification in listed companies will lead to the failure of internal control auditors to identify the signals of the identification criteria of internal control defects.The main contribution of this paper lies in the following aspects:on the theoretical side,firstly,based on the concept of "system isomorphism" of the new institutionalism theory,this paper expands the research perspective of internal control defects identification.From three aspects of institutional isomorphism,this paper analyses the institutional motivation of the internal control defects identification in listed companies,and provides a new perspective for the behavior study of internal control defects identification.Secondly,it opens up the "black box" of decision makers in the information decision-making process,enriches the research on manager behavior of information disclosure and cognitive operation mechanism of decision-makers.Empirical test of the existence of "institutional isomorphism" in the internal control defects identification of listed companies,and provides empirical evidence for "institutional isomorphism" of internal control defects identification.Thirdly,it enriches the research on the economic consequences of internal control defects identification.This paper examines the regulatory effect,revenue and risk effect and information effect of "institutional isomorphism" of internal control defects identification.In terms of practice,firstly,for the regulators,it provides a reference for the direction and intensity of supervision for the disclosure system to determine internal control defect identification standards,and helps regulators to guide and supervise the implementation of more targeted internal control defects identification.Secondly,for the listed companies,it is helpful to identify the economic consequences caused by internal control defects identification,and to promote them to formulate and disclose the identification standards of internal control defects effectively.