Research On Internal Supervision Of Listed Companies Based On Information Disclosure

In recent years, the debates on the selection of internal supervision mode have not stopped within the academic community, most are of theoretical perspective or from a single aspect to make an empirical research into the effectiveness of internal supervision. This paper, on the basis of previous studies, mainly focuses on the influence to information disclosure from internal supervision perspective systematically by using both theory and applications to test its effectiveness and problems faced at present stage.The choosing of internal supervision variable as the mode of this paper is under the consideration of various elements which will bring influence both from independent directors and its'board of supervisors and meanwhile makes analysis to illustrate the contributions attributing to internal supervision towards information disclosure. Empirical results show that the independent director system and monitoring system both play a role, not purely a"vase", but their role is far less than the people's expectations towards them: such as the size and quality of Board of Supervisors, the size and quality of Independent Directors, the diligence of Independent directors, as well as the number and scale of the Board of Auditors, all of these factors will have a certain effect on information disclosure, that is the contributions to the quality of information disclosure. This paper analyzes the concerning factors due to internal supervision meanwhile analyzes the major external factor—external supervision. Based on information disclosure, this paper constructs an uncompleted dynamic game mode for internal supervision and external supervision and establishes the cooperative relationship between them to get the conclusion: only the external supervision succeeding in supervising the internal supervision will bring the validity of internal supervision so that the external supervision can achieve its effectiveness. Therefore, we should manage to compromise the relationship between internal supervision and external supervision to keep a state of balance, which will gain the maximum benefit for supervision on a whole. At the last part of the paper the author constructs a kind of internal supervision mode which will suit to our listed companies, namely"An Amended Dual-Directors Institution"to propose some proposals to internal supervision for our company.Based on information disclosure, this paper makes a systematically analysis on internal supervision of listed companies in China, at the same time, proposes to build a Dual-directors Institution under a Vertical Mode co-existing with Independent Director Institution Mode (defined as"Amended Dual-Directors Institution under a Vertical Mode"in the paper). On another hand, the author proposes some reform suggestions in terms of Board of Supervisors and Independent Directors Institution in China at present stage. Some examples mentioned can be specified as following: to clear the rights and independence of Board of Supervisors, to be sure of the composition and functions of Audit Committee and so on so forth. The conclusion part of the study contributes to an objective assessment on internal supervision effectiveness to listed companies in China, as well as provides a frame of reference to policy making.