Research On Market Reaction Of Internal Control Information In China

Since Enron Event exposure at the end of2001,a large number of accounting fraud scandals of listed companies have been reported in the United States,such as The WorldCom, Merck, xerox and the other large international listed companies, which has greatly shaken confidence of investors.On July30,2002, United States Congress enacted the Sarbanes-oxley Act, which became the turning point in the history of internal control disclosure of information, and marked internal control disclosure of information from voluntary to mandatory disclosure stage.In2008, Ministry of Finance, China Securities Regulatory Commission,the National Audit Office, CBRC(the China Banking Regulatory Commission), and SIRC(China insurance regulatory commission) jointly issued Enterprise Internal Control Basic Norms. In2010,the five ministries and commissions released three form a complete set of guidance.The Enterprise Internal Control Supporting Guidance along with the Enterprise Internal Control Basic Norms build the enterprise internal control standard system in China. Companies which were listed on both inside and outside at the same time since January1,2011perform firstly, and since January1st,2012expand to the company listed in Shanghai stock exchange, shenzhen stock exchange main board.The start implementation of the system of internal control indicates that internal control information disclosure from voluntary to mandatory. Against this background,it has an important theoretical significance and practical significance to research on the market effect of internal control information disclosure for the securities market regulators, investors and managers of enterprises.In this paper, it adopts normative research and empirical research methods to make a study on market reaction of the internal control disclosure of information,based on the data of companies listed on both inside and outside at the same time on January1st,2012, and based on the theoretical basis of the Asymmetric Information Theory, Principal-agent Theory, Signalling Theory, and Efficient Capital Markets Hypothesis and so on. Through sorting, induction and analysis of the domestic and foreign scholars’s relevant research literature on internal control information disclosure, learning from the existing research result, analyze theoretically the influence of the internal control disclosure of information on users decision-making, accordingly put forward research hypothesis. Then, use event study method and multiple linear regression method to make empirical analysis, so as to complete the hypothesis test, the study found that mandatory disclosure of internal control information disclosure has information content, with a negative impact on stock prices, and the disclosure of internal control defects also have a negative effect, finally, puts forward countermeasures suggestions according to the analysis result.