An Empirical Study On The Influence Of Internal Control Of Listed Companies On The Inefficient Investment Under Uncertain Environment

Investment is an important decision in the financial management of the company, while most of the current domestic enterprises have the situation of insufficient investment. There are two aspects for this reason. The external reasons are insufficient of market access opening, inefficient of investment approval, financing difficulty and financing costly. However, the internal reason could be defects in company management. Because the brake on company's considerable development of underinvestment, it is worthy of attention to alleviate the situation of underinvestment. In recent years, the internal control becomes more and more important role in corporate governance. In this paper, whether the internal controls could restrain the underinvestment are studied. Based on the research of the relationship, the environmental uncertainty is studied for whether it could play a role in regulating the relationship.In this article, based on the analysis of the principal-agent theory and information asymmetry theory, models had been built through the relationship of the environmental uncertainty, internal control, and underinvestment.4879 samples of Shanghai and Shenzhen stock market from 2010 to 2014 were select as the observation. Some meaningful conclusions were obtained by the regression analysis of data with STATA, which will be of some value for the later reference.The results show that internal control quality has a significant inhibitory effect on the underinvestment, so companies with high internal control quality will have less underinvestment. The favorable internal control environment can ensure that director, supervisor and management will be committed to maximizing the company's value, and the possibility of underinvestment can be reduced to the minimum. Adverse selections can be less for good information and communication of internal control, both the financing cost and underinvestment will be less. The management will pay more attention to the company's internal governance for the environmental uncertainty, therefore the internal control will further reduce underinvestment.