The Research On Influential Factor Of Internal Control Disclosure Quality For Domestic Listed Company

The internal control was born with dramatic economic development, and grows up with external competition and internal management. Internal control is a process that provides reasonable assurance for the efficiency of management, the reliability of financial reporting, the compliance of relevant laws and regulations, controlled by corporate boards, management and other personnel. Disclosure of internal control means board of directors or management evaluate the integrity, rationality and effectiveness of internal control based on the standards of the evaluation of internal control, and form internal control self-assessment report reviewed and evaluated by the certified public accountants, and then provide these information to external customers.Since 2000, a series of financial scandals happened in the U.S. capital market, which struck investors’confidence and the stock market in both Europe and America. In order to restore the confidence of the investors to the U.S. government and financial markets, President Bush signed the "Sarbanes - Oxley Act" on July 30,2002. The Act requires listed companies to disclose internal control information. China’s stock market also appeared many of the listed company’s financial fraud cases, indicating that the internal control of listed companies in China, whether in management or in the system, there are many problems. Some policies were set up since the last decades in 20th century.Internal control information is an important component of information disclosure for companies. For managers, information disclosure of internal control is not only an effective way that they can eliminate fiduciary duty, but also improve companies’management to a better, higher level and lower incidence of financial fraud. For those external information users, information disclosure of internal control can protect their interests more effectively. There is still a long way to perfect internal control information disclosure for Chinese financial Markets. However, most of research papers only focus on theoretical exploration, but are seldom supported by empirical data, which can not reflect the status of information disclosure of internal control of domestic listed companies in China comprehensively, and Information users, including listed companies, investors and regulators, can not really understand the internal control information. And it is not conducive for information users to make decisions.This paper explores elements which can influence the quality of information disclosure of internal control based on successful experience of the U.S. Sarbanes-Oxley Act and other useful research results. Some important policies are involved, such as "Shanghai Stock Exchange Guidelines for Internal Control of Listed Companies ", "Shenzhen Stock Exchange The Guidelines for Internal Control of Listed Companies" and the "basic norms of internal control", The main purpose is to promote China’s listed company’s internal control system, and promote the development of securities market healthy and orderly, Thus protecting the legitimate rights and interests of investors.Author chooses internal control information of A- share firms of manufacture under Shanghai Stock Exchange (SSE) from 2007 to 2009 to analyze the status of information disclosure of internal control of listed companies, and then reviews literature of internal control information inside and outside of China. The quality of information disclosure of internal control is analyzed as interpreted Variable in empirical research. Author also chooses firm scale, liability rate, profitability, auditing opinion, fame of auditing institution, ST, year, the nature of the largest shareholder and rate of independent directors as interpretation variables. Supported by empirical analysis, this paper reveals the status of information disclosure of internal control of listed companies as well as the factors which affect the listed companies in China and the relationship between them.The whole thesis is divided into six parts. The first part is the introduction to the background of research, and pointed out the purpose of this paper and explains significance of the study. The second part is a literature review, introduces research results of domestic and foreign scholars on the internal control disclosure, then propose the content of the study. The third part is the theoretical analysis of internal control disclosure, and it’demonstrates relationships among asymmetric information theory, principal-agent theory and signaling theory. The fourth part analyzes the status of information disclosure of internal control of listed companies in china. The fifth part is an empirical analysis of information disclosure of internal control in China. The last part is the conclusion of the study, suggestions and prospects.The empirical study concluded that there are many deficiencies of information disclosure of internal control of listed companies in china. Although the past three years, the quality of information disclosure of internal control of listed companies increased year by year, but the mean scores were 5.73,6.08 and 7.67 points. Compared with 14 points out, there is still a big gap. And firm scale, liability rate, auditing opinion, fame of auditing institution, ST and year are significant to the quality of information disclosure of internal control. However, these elements show no significance amongst firm profitably, the first shareholder properties, rate of independent directors and the quality of information disclosure of internal control.Finally, the thesis gives proposal to improve the quality of information disclosure of internal control of domestic listed companies by considering particularity of securities market in China. The purpose is to establish trusted information disclosure system so that investors can get more truthful and reliable information.