The Research On Influential Factors Related To Internal Control Disclosure Of Chinese Listed Companies

The human is the management, the management is the control. There is a series of viciousaccounting information on frauds come into light since2001, such as Enron、WorldCom andMerck&Co Inc., one of the most important reasons is that the company’s internal control isinvalid. In order to solve these problems, the U.S. Congress adopted and promulgated the“Sarbanes-Oxley Act” in2002, which formally put forward the mandatory requirements oflisted companies to disclose their internal control report. There are also a series of internalcontrol problems in China, such as Zhengbaiwen, cao, chinalco huge losses, Erie executiveswere detained, Sanlu milk powder had quality problems, which shows that the internal controlis weak and the information disclosure is lack. China also successively introduced policies suchas “Internal control guidelines for listed Companies”“The enterprise internal control basicnorms”. In2010five ministries introduced “supporting internal control guidelines” to requirethe listed companies which on the Shanghai stock exchange, Shenzhen stock exchange mainboard to self-assess the effectiveness of internal control, hire accounting firms to audit theeffectiveness of internal control and issue the audit report since January1,2012. There are stillmany problems about internal control disclosure such as disclosure motivation is not obviousand disclosure content becomes a mere formality, while China has established the internalcontrol disclosure regulations not long ago. Therefor the study on influential factors related tointernal control disclosure has great significance.Based on the economic theory as the support, from the contract theory, agency theory,asymmetric information theory and signal transmission theory, to discuss the importance ofinternal control information disclosure, and then we use the delphi method and AHP to establishthe internal control information disclosure quality valuation system as well as the qualityevaluation standard. Based on positive method and internal control information disclosure wehave constructed, we use the sample of A share in stock market of Shenzhen in China2012, andtake empirical study on the influence factor from the corporate governance structure, corporatecharacteristics and intermediary characteristics. The research finds that majority stockholder isstate, ratio of independent directors, firm size, EPS, audit opinion type and internal controldisclosure have a positive correlation, Z and internal control disclosure have a negativecorrelation, among which majority stockholder is state and EPS profitability influence theinternal control disclosure the most. In the end, we propose the suggestions from strengthen theexternal supervision and improve the internal governance to improve the internal controlinformation disclosure.