An Study On Quality Of Information Disclosure Of Internal Control

Since "Sarbanes-Oxley Act" requires the listed companies to disclose the evaluation reportof internal control in2002, internal control information becomes more and more important in thecapital market. In China, the disclosure of internal control information started relatively late, butdevelops rapidly. The "internal control guidelines" of SSE and SSE issued in2006, and "basicnorms of internal control" and its supporting guidelines promulgated in2010, marking theestablishment of standard system of internal control in China. With the disclosure of internalcontrol information transfers from voluntary disclosure to mandatory disclosure gradually,investors starts to pay more attention to the quality of information disclosure of internal control.This paper attempts to explore the motivation of companies that disclose high quality ofinternal control information from the perspective of agency theory and reputation theory, andinvestigate the influence of high quality information of internal control on the performance of thecompany, by using the self evaluation reports of internal control disclosed by Shanghai A sharesof listing company of2010-2013. This paper empirically studies the relationship between theagency cost(corporate reputation) and disclosure of high quality internal control information. Theresults show that: the agency cost has no significant relationship with the disclosure of highquality internal control information, but the company reputation is significantly related to thedisclosure of high quality internal control information. So reputation theory can explain themotivation of companies that disclose high quality of internal control information. Moreover, thedisclosure of high quality internal control information can effectively improve the performanceof a company. At the end, the paper proposes practical recommendations about improving thequality of the disclosure of internal control information from company level, media level and thegovernment level.