The Effect Of Corporate Governance On The Disclosure Of Internal Control Attestation Report

The United States of America enacted the famous Sarbanes-Oxley Act in2002because of the financial fraud of Enron. The section302of SOX requires that the signing officers should certify that they have presented in the report their conclusions about the effectiveness of their internal control based on their evaluation as of the date. The section404of SOX requires that the auditor should attest to and report on the management’s assessment of it’s internal control. Thereafter, there are lots of discussion about internal control around the world. With the development of China’s economy and some financial fraud, Chinese people also pay attention to internal control more and more. Ministry of Finance and stock Exchange have enacted many acts about internal control from2006. In the recent, the reporting of internal control attestation is voluntary. In such circumstances, some listed companies have already disclosed internal control attestation report. So, it is possible for us to discover the listed companies’ incentive to disclose the internal control attestation report. The article investigates the influence of corporate governance on the disclosure of internal control attestation report.Based on internal control attestation reports and financial data of2009-2010disclosed by listed companies in shanghai and Shenzhen Stock Exchange, the paper tries to investigate the effect of corporate governance on the issuing of attestation report on internal control. The results show that:when the ownership is concentrated, the companies are unlikely to disclose the internal control attestation report:The state-holding companies don’t like to disclose such report: the companies attempt to disclose the report with more general meetings of shareholders; the companies like to disclose the report with larger size of board of directors. However, the percentage of independent directors and the size of board of supervisors are not related to the issuing of internal control attestation report. Such results show that:in China, the ownership structure is very important for the disclosure of internal control attestation report. However, the independent directors and the board of supervisors are not effective.The main content of this paper includes the following parts:Chapter1is introduction, which contains the background, significance, train of thought and framework of the paper.Chapter2is literature review. Based on the relation of corporate governance and internal control, the disclosure of internal control information and the influence of corporate governance on the reporting of internal control attestation.Chapter3is background, theory basis and hypothesis, which mainly introduces the development of China’s corporate governance, the development of disclosure of internal control information, agency theory, signaling theory and the hypotheses.Chapter4is the research method and data, which contains sample selecting, data source, measurement of variables and regression model.Chapter5is empirical results and the analysis of the results.Chapter6analyzes the countermeasures aiming at the problems which the research reveals and the limitation of the research.