| In recent years,with a series of domestic and foreign laws and regulationspromulgated, whether investors, creditors, managers and regulators put more attention tothe internal control, and it obviously becomes the focus of all parties.But we are underabnormal conditions in this global capital market risk, investors wait-and-see, enterprisefinancing is in an emergency, and is there relevance between the internal quality controland enterprise financing? The "external demand" hope enterprise offer related informationmore timely, reliably and transparent, reduce the effect caused by information asymmetry.The "internal demand" hope to improve the credibility of enterprises through theconstruction of the internal control, transferring good image, expanding the financingsource. Regulators want to constraint the enterprises by construction and development ofthe internal control system and standardize China’s capital market, finally it will promotethe development of China’s securities market. Therefore, the relationship between theenterprise’s internal control quality and the cost of financing is worthy of further study.Based on the research results at home and abroad and combined with the currentsituation of internal control, we has been clear about the research topic-the relationshipbetween the quality of internal control and corporate financing costs. Then we analyse ofthe related theory and propose some related assumptions by using the principal-agenttheory, asymmetric information theory, signal transmission theory. Next, we use theXiamen University (2012) internal control index including five elements through theempirical descriptive statistics, Pearson test, multiple regression analysis to verify theinfluence of the quality of internal control and corporate financing costs. Results showedthat, the better the quality of internal control in enterprises, the lower cost of equityfinancing and debt financing they will offer. Further analysis showed that, the relationbetween internal control and the cost of financing is more significant in the non stateowned listing Corporation, while it is not significant in the state-owned listing Corporation. When grouped by region, the relationship between them is more significant in the East,followed by the western, the last is the central. Finally, according to the five elements, thecost of equity financing has a significant negative correlation with risk assessment, controlactivities and information communication and the five elements of internal control, andthe debt financing cost is just related to control activities. Based on this, this paper thinksthat we should take effect measures including increasing the penalties for intentionalfailure to disclose the effectiveness of internal control internal control or false disclosure,improving the system of internal control in China from the new COSO framework, andfinally strengthening the internal audit to further standardize and promote the prosperity ofChina’s capital market. |
