The Research On The Effect Of Internal Control Effectiveness On The Cost Of Debt Financing

Since the 21st century, the Internal Control gradually became the focus of the listed companies and the various stakeholders in China. Shanghai and Shenzhen stock exchange have released internal control guidelines. Securities regulatory commission and other departments jointly issued the "enterprise internal control basic norms" and so on. The promulgation of the various specification file is just provide the authoritative criteria for the effectiveness of the internal control. The internal control will affect many aspects of economic activities and affairs of the enterprise, including the debt of the enterprise cost. This has been proved by the research achievements of scholars in our and foreign countries. However, there are few researches based on the perspective of the degree of marketization under the special national conditions of China, which is not conducive for the enterprises to budget, control and manage the debt financing cost under the background of our country. So, from the perspective of marketization degree, this paper research how the effect of internal control can affect corporate debt financing costs.Based on the theory of asymmetric information, signaling theory and system theory, we use the 2009-2013 listed companies in Shanghai and Shenzhen Stock Exchange as research samples. By using empirical research methods, we research the effect of internal control quality on bank credit loan financial cost from the aspects of the nature of property rights, the relationship between market and government, the development degree of economy of the non-state, the degree of product market development, financial marketization degree of internal control effectiveness, legal system environment. First of all, we analyze the background and significance of this research and combine the related literature both at home and abroad from three aspects. Then we put forward the research hypothesis in this paper on the basis of theoretical analysis. Second, do the empirical analysis and robustness testing on the basis of the collected and organized data. We find the following conclusions:(1) There is a significantly negative correlation between the effectiveness of internal control and corporate debt financing cost;(2) In the region of a more harmonious relationship between government and market, the negative correlation between the effectiveness of internal control and corporate debt financing costs is more significant. Relative to the state-owned enterprises, the negative correlation is more significant when comes to private enterprises in the region of less government intervention; (3) In the region of a more developed non-state economic level, the negative correlation between the effectiveness of internal control and corporate debt financing costs is more significant. Relative to the state-owned enterprises, the negative correlation is more significant when comes to private enterprises in the region of more developed non-state economic level; (4) In the region of where product market development degree is higher or the legal system environment is more perfect, the negative correlation between the effectiveness of internal control and corporate debt financing costs is more significant. Finally, we summarize the research conclusion of this article and put forward some related suggestions according to in the basis of previous chapters.