Is Mandatory Disclosure Of Internal Control Information In Favor Of Protection Of Investors?

Enron, WorldCom scandals, as well as Yinguangxia, CAO event, have deeply sounded the alarm to us:a sound and effective internal control system for the development of enterprises is essential. If the enterprise internal control mechanism is invalid, it will not only make the enterprise lost the good development opportunity, at the same time will bring the social economy and investors with heavy losses. Investors need to understand the construction of the company’s internal control systems, which provide the basis for their investment. Therefore, the proper and actual internal control information is particularly important. This can reduce the problem of information asymmetric between companies and outside investors, thereby effectively protect the interests of investors.With the continuous development of China’s capital market, the constant improvement of the financial system, investors’s requirements for the quality of internal control information have become higher and higher. In April2010, the Ministry of Finance, the Securities Regulatory Commission, the Audit Commission, the China Banking Regulatory Commission, the China Insurance Regulatory Commission and other five ministries jointly issued18internal control guidelines, to perfect the internal control system construction, information disclosure and so on. Our country also formally transit from voluntary disclosure of internal control information to mandatory disclosure. Mandatory disclosure of internal control information is gradually introduced, but it will lead to the enterprise shall attach importance to the construction of its internal control, and improve the quality of its internal control information disclosure, so that passing a good signal to the market. Only in this way, investors are expected to reduce the risk of he enterprise and will be willing to invest in enterprises. So, the implementation of the mandatory disclosure of internal control information is really more advantageous than the voluntary disclosure of investor protection? In this paper, I will discuss and analyze the influence degree of the mandatory disclosure of internal control information for investor protection based on the discussion ahead.This article is based on existing research results at home and abroad, combing through theoretical and empirical, analysis of the impact of information on the quality of accounting information and capital costs of mandatory disclosure of internal control, using double-difference model which is often used to test the policy for discussion its impact on investor protection, in order to analyze its relation to voluntary disclosure is not effectively improve the level of investor protection.This thesis can be divided into six parts:Firstly, introduction. It clears out research background, significance, contents, methods and positive contribution and prepares for further thorough research.Secondly, literature reviews. Reviewed the literature from three aspects: information disclosure of internal control, internal control information disclosure impact on the quality of accounting information, internal Control Information Disclosure impact on the cost of capital. Review the status of these three areas of research, and to explore the feasibility of further research.Thirdly, theoretical analysis. This part introduces the theory for mandatory information disclosure of internal control of investor protection, defines the internal control information disclosure, investor protection conceptual and introduces the related theory.Fourthly, internal controls information disclosure for investor protection impact study design. On the basis of literature review, concept definition and theoretical analysis, in this section clears out the assumptions made, sample selection, variable definitions and model building.Fifthly, empirical research. This section describes the sample descriptive statistics, mandatory disclosure of internal control information on the quality of accounting information and the cost of capital affect the multiple regression analysis, and analysis of the results and the relative ratio of voluntary disclosure. Finally, the use of other methods of conversion metrics robustness test.At last, conclusions. It mainly covers research conclusion, insufficiency and further research directions.Through theoretical analysis and empirical testing, we draw the following conclusions:the mandatory disclosure of internal control information in2011and2012, compared to the voluntary disclosure, mandatory disclosure of internal control information allows businesses accounting conservatism and accrued earnings quality has improved significantly, which was a significant positive correlation. Reducing the cost of capital is not very clear, that is a negative correlation but not significant. This also shows that mandatory disclosure improve the level of investor protection to some extent.The innovation points of the thesis:(1) This paper is based on the latest system in the background, using empirical methods to analyze the relevant departments to promote the effectiveness of internal control mandatory disclosure of information, enriching the mandatory disclosure of internal control information in the literature.(2) This paper is from the quality of accounting information and the cost of capital for analyzing of mandatory disclosure of internal control information for the degree of investor protection, in order to improve investor interest protection measures to provide favorable data support.The inadequacies of this thesis:(1) This paper does not have no further evaluation system to establish a measure of investor protection, without considering the impact of investor protection factors more.(2) Due to the mandatory disclosure of internal control information policy implementation time is shorter, the effect of the policy is not very clear, empirical data samples is less than the voluntary disclosure.