Research On The Influence Of Internal Audit On Enterprise Value In Listed Companies

In recent years, with the development of China’s capital market and the changing market environment, especially the occurrence of the2008financial crisis, the competition between China’s enterprises are growing fiercely day by day. As the major group in the capital market, listed companies are facing gradually increased competitive pressures and operational risks, so enterprise value maximization has become the objective of the listed companies’pursuit. Because internal audit can prevent risks, reduce costs and improve corporate governance, so the effect of internal audit on enhancing corporate value has become increasingly prominent. Besides, even after years of development, the majority of our listed companies have set up independent internal audit departments, but in the actual work of internal audit, there are still many factors that hinder value-added role of internal audit to play. Therefore, how to increase corporate value by improving the internal audit has become the problem which is focused and urgent need to solve for the listed companies. Foreign scholars’study about the value-added effect of internal audit began early, and they have got a wealth of research results by using a variety of research methods. However, our scholars have begun the normative research about the value-added function of internal audit, but lack of empirical research, so it is very necessary to use the empirical method to study the influence of internal audit on enterprise value in listed companies. This dissertation in this context, by the method of combining the normative and empirical research, studies the influence of internal audit on enterprise value of listed companies in China, and gives advices on improving internal audit based on research findings.This dissertation is divided into five parts:The first chapter is the introduction. This part provides an overview of the background and meanings, concludes the main ideas of the domestic and international research and puts forward idea and methods of this study. Finally, this part points out the innovation and deficiencies of this paper.The second chapter is the analysis of related concepts and basic theory. From the concept of internal audit, this part defines internal audit function, discusses the concept of enterprise value and on this basis uses fiduciary duty theory, system theory and value chain management theory to further sort out the theoretical basis of the internal audit’s effect on enterprise value.The third chapter is the present situation of internal audit and the theoretical analysis about the influence of internal audit on corporate value in listed companies. Firstly this part analyzes internal audit’s present situation of China’s listed companies combined with the survey data of the Internal Auditors Institute and the actual data from listed companies. Secondly this part concrete analyzes the mechanism of internal audit’s effect on enterprise value in the field of corporate governance, internal control and risk management. Finally this part points out the internal audit’s main factors in listed companies based on the internal audit’s value added function.The fourth chapter is the empirical analysis of the effect of internal audit on enterprise value in listed companies. This part selects data of2010A-share listed companies on the motherboard which is disclosed in the internal control self-evaluation report in Shanghai and Shenzhen Stock market, and uses multiple linear regression models to empirical research.The fifth chapter is based on the normative and empirical results of the study. In accordance with the conclusions of this paper, this part proposes relevant advices to improve the internal audit of listed companies in China from the external environment, internal environment and staff of internal audit.The innovation and significance of this dissertation is following:The majority of the studies on the impact of internal audit on enterprise value are normative studies, there is little empirical research. This dissertation combines the normative and empirical research, and validates the findings of the normative study by empirical methods, which is still relatively rare in the domestic research. In normative studies, this dissertation concrete analyzes the effect of internal audit on enterprise value in the field of corporate governance, internal control and risk management, and points out the internal audit’s main factors based on the internal audit’s value added function, which are the position of internal audit department, the scale of internal audit department and professional competence of internal audit staff. In the empirical study, this dissertation chooses these three factors as alternative variable for internal audit, which is rare in the existing research.