A Study On The Influence Of The Quality Of The Internal Control On Financial Restatements

Annual financial report as a key carrier of listed companies to disclose financial information to the world, on the one hand, can provide investors with important news about enterprise, on the other hand can play an important reference for investors to make the right decision. Therefore, on the disclosure of the financial report has been praised by the attention of regulatory authorities. In recent years, all kinds of annual reports of listed companies supplement and correction announcements frequently appear in the line of sight of people, people can not help but to the reliability of financial statements, authenticity and accuracy to question, to some extent this said financial report before there may be some problems. This supplement and correction announcements phenomenon referred to as financial restatement, one aspect will affect the investor’s investment decision-making, a threat to the investors of the securities market information dependence; On the other hand, the company after financial restatements, there will be a certain degree of its market value drop, will bring huge losses to investors; Finally still can make the capital market in the allocation of resources in the play is affected by the great.In recent years, more and more listed companies gradually frequent release financial restatement, this phenomenon has caused wide attention of the academic and practice, and make them actively devoted to the research, find countermeasures to prevent and reduce. Corporate governance in the modern enterprises of the two rights separation problem, it is important to a strategic arrangement, the financial report as a results of this strategic arrangement reflects the disclosure of information carrier, clearly and corporate governance are inseparable. Therefore, on the one hand, to strengthen the perfection of the governance structure of listed companies, on the other hand, strengthen internal control mechanism, establish a sound, it can has promoted the quality of information disclosure and avoid the occurrence of financial restatements have very positive effect. In short, the construction of internal control should be how to effectively improve the quality of the company’s accounting information as its target. And financial restatement can, to a certain extent as a substitute for the accounting information quality response variable, from the promotion is to establish and perfect the internal control will help make the company’s earnings manipulation space compression, financial restatement activity was lower, the accounting information quality are improved greatly.This paper mainly study the influence of the the quality of internal control on financial restatement, the key lies in how to choose reasonable under the existing conditions and the proper standard index to measure the quality of internal control, further to study the differences about the quality of internal control on financial restatement under the different nature of property rights in the company. Hope that through this article research for our further put forward how to perfect the internal control, to reduce the financial restatements, to raise some pointed opinions and suggestions. Financial restatement of the data from the database of Wind manual collection. Then through the theoretical analysis to the influence of the quality of the internal control on financial restatement, further study of the internal control of listed companies under different property rights of financial restatement inhibition. Research hypothesis is presented according to the theory analysis and empirical analysis finally puts forward policy suggestions on the writing ideas, this paper consists of the following several parts:Part1is the introduction, mainly introduces the paper’s research background and research significance, research ideas and methods, research content and framework, and the expected contribution and deficiency.Part2for the quality of internal control and financial restatement related research literature review.Part3for the quality of internal control and financial restatement of the theoretical analysis and hypothesis is put forward. First introduces how to measure of the quality of internal control, then introduces the concept of financial restatement, and then through the principal-agent theory, asymmetric information theory and the theory of transaction cost theory.Part4as the research design and the selection of samples. This part include the design of the model, the definition of the variables and the choice of sample. Part5for the empirical results and analysis. It is concluded that the internal control quality of the company, the possibility of financial restatement is smaller, and further inspection to distinguish the different nature of the property under the control of the company, the internal control for financial restatement inhibitory effect, so as to verify the hypothesis of this article research.Part6conclusion and policy suggestions to the research of this paper.The contribution of this paper lies in:first, to some extent for the execution of our country in2007, the new guidelines to provide evidence for the condition. Second, discuss the different nature of property rights under the internal control of financial restatement of inhibition, to help promote the relevant regulatory authorities, academic and practice circle clear understanding to the construction of internal control of listed companies in our country, at the same time easy to relevant agencies and departments to make the right judgment and formulate follow-up guidance policy. Third, more crucially, correction notice across different time periods, its research value lies in how to effectively regulate the behavior of correction notice of listed companies to form a reference suggestion, also has effect for our country how to build a reasonable system of investor protection play an influential significance. We can, therefore, the effective internal control system is constructed to suppress the occurrence of financial restatements,In view of the author knowledge ability is limited, in this paper, the following deficiencies pointed out:First, the quality of internal control measure problem theory has not yet formed a consistent view, due to the limitation of time and effort in, on the basis of existing research, this paper adopts Dibo index to measure quality of internal control, internal control does not consider other measures.Second, there are many influence factors in internal control of financial restatement, this paper considers only one part of, including the audit opinion, board independence, the conclusion has yet to be further.