Research On Correlation Between Internal Control Disclosure And Accounting Information Quality Of China’s Listed Firms

In recent years, financial fraud cases occurred home and abroad frequently, seriouslydisrupting the healthy development of market economy, and dampening market confidence atthe same time. People cannot help but questioning the reliability of accounting information.Internal control information, as important non-financial information, could reflect theconstruction and function status of internal control system. What’s more, as it was stated insignal transmission theory, internal control information could be used as a signal to helpdeliver the news of company operating in good condition to the public, enhancing thedependability of company’s financial information. For such reasons, more and more businessand stakeholders turn to focus on internal control. The government has released a series oflaws and regulations on the construction and disclosure of company’s internal control system.China’s listed company has been forced to disclose internal control information since January1st,2012. Then the information disclosure quality and its influence on accounting informationbecame a heat. Hence, from the prospect of listed company, this article conducted a researchon the correlation between information disclosure and accounting information quality.Firstly, by the use of AHP, an internal control information disclosure quality evaluationsystem was built, judging from self-evaluation and external audit. After statistically analyzedthe sample data, it was found that the overall quality level was barely satisfactory, which wasprobably because the construction process just took off. A number of companies’ disclosurewas perfunctory and chose not to release external audit report which was the voluntary. As aresult, we still in the need of improving internal control system.Secondly, for the target of researching on the correlation, which turned out to besignificantly positive, this article chose the results of Shenzhen Stock Exchange Evaluation asthe criteria of accounting information quality to build regression equation and model. Thefinal model passed the significance test in multicollinearity. The result showed the positivecorrelation and proved that enhancing internal control disclosure level could improveaccounting information quality.Finally, on the basis of conclusion, this article provided suggestion on existing problemson behalf of government and company management.