Research On Information Disclosure Of Internal Control In Listed Companies In China

Internal control is an integral part of corporate governance in the modern enterprise system. Both of internal control system and information disclosure play an important role on improving internal corporation management. However, company managers have ignored company internal control in such a long time that they don't have strong motivation to disclose internal control information. Besides, external information users don't have the sense of analyzing financial information together with internal control information, and their needs of internal control information are limited. All of these factors are the obstructions to improve internal control system and to the quality of information disclosure. Especially in recent years, a series of severely financial frauds have exposed the weakness of internal control, and both of the regulatory agencies and the investors have come to realize the importance of internal control and the quality of information disclosure in the listed companies. As a result, the United States passed the Sarbanes-Oxley Act in 2002, which required the listed companies to disclose their internal control information. In 2006, Shanghai Stock Exchange and Shenzhen Stock Exchange have both issued《The Guidelines for Internal Control of Listed Companies》; in 2008, the Finance Ministry together with other five ministries issued《The Basic Standards of Internal Control》. Therefore, these Standards provide guidelines for the listed companies in China to establish internal control system, and also require the listed companies to publish their internal control information. Under the background of the《Guidelines》and the《Basic Standards》, this paper explores elements which can influence internal control disclosure in a manner of combining criterions with empirical research.This paper consists of five parts. The first part is the introduction. Firstly, it presents the research background and research significance; secondly it takes a brief review of relevant research on the disclosure of internal control information in the domestic and foreign research, and then it summarizes the research method, main content, innovation and deficiencies. The second part is an overview of the basic theories. It introduces the theories related to internal control information disclosure, such as the concept of internal control, internal control disclosure concepts, the main body, form, content, effect and so on. The third part focuses on the theoretical basis of two different ways to disclose internal control information (voluntary disclosure and compulsive disclosure), such as the agent theory, asymmetric information theory and signal transmission theory. The fourth part is the empirical analysis which is the most important part of this paper. This part studies on the situations of internal control information disclosure in China according to the annual reports of the listed companies in 2008. And it discusses factors which can influence internal control information disclosure in two aspects—the internal governance and the external supervise. Finally, it tests the hypothesis through three methods in SPSS 11.5, such as descriptive statistics, relevant analysis and multivariate regression analysis. The fifth part is the conclusion. According to empirical research results, we know there are several serious problems in internal control information disclosure of listed companies in China, such as lack of voluntary information disclosure, insufficient of effective information demand, deficiency of external regulatory and so on. Therefore, we should improve internal control information disclosure by considering both of the internal corporate governance and the external regulatory.