Study On Board Of Directors And Disclosure Of Internal Control For Chinese Listed Companies

As an important mechanism for the management and operation of the companies, internal control may effectively ensure the healthy development of the companies'economy. With the growing number of business and the increasing complexity of internal structure, to establish a sound internal control mechanism has been attracting more and more attention of the companies. After the fraud cases of WorldCom and Enron, people were deeply aware of the importance of internal control in the management system of enterprises, then made a series of disclosure requirements in respect of internal control information.Moreover, the relevant government regulatory authorities and other stakeholders have been concerned about the companies'construction of internal control, the two stock exchanges in China have been released the "Internal Control Guidelines" respectively in 2006, requiring listed companies to disclose relevant information about their construction of internal control system. As another important system of corporate governance arrangements, the board of directors effectively alleviates the agency problem, as well as shoulders the responsibility of monitoring and evaluating the companies'construction of internal control. So it plays an important role in the process of the establishment of internal control.Based on the agency theory and signaling theory, we consider A-share listed companies of A-share in Shanghai exchange between 2006 and 2009 as the samples to study the relationship between the important characteristics of board of directors and the status of companies'internal control disclosure. We found that the increase in the proportion of independent directors, the number of board meetings and "dual" leadership structure of the board of directors will encourage companies to disclose more detailed information on internal control. At the same time, the establishment of the audit committee and the increase in the proportion of directors with financial backgrounds can effectively improve the operational efficiency of the board, so as to urge enterprises to disclose the details of internal control information. In addition, the size, age, profitability and other variables may also affect the information disclosure of internal control.