Effect Of Disclosure And Correction Of Deficiencies In Internal Control On Enterprise Value

Internal control exists in all aspects of production and operation of an enterprise,it is important to help companies to avoid risks and achieve business objectives.A good internal control system is already becoming an important guarantee of a modern enterprise for its healthy operation and sustainable development.On one hand,a series of financial scandals appeared in recent years,and did a serious damage to the interests of investors.So the construction of a company's internal control draws increasing attention.On the other hand,under the environment of economic globalization,the strategy of enterprises "going out" and the internationalization of the accounting industry objectives in CHINA have a strong demand to establish a sound internal control system in enterprises.While the way for most people to know the situation of internal control of an enterprise is the information of the enterprise disclosure to out.Since year 2008 the Ministry of Finance and other five ministries issued the The basic norms of internal control of enterprises jointly,and then issued The supporting guidelines for enterprise internal control in year 2010,for the construction of internal control in listed companies and its system of internal control information disclosure.Wherein the supporting guidelines requires the listed companies of main board in Shanghai and Shenzhen Stock Exchange to mandatory disclosure the information about internal control deficiencies from January 1,2012.The internal control system is improving.And this year is the fifth year of to implement the requirement of mandatory disclosure of internal control deficiencies.But how the implementation of China's listed companies to this provision in the past few years?And what impact of disclosure deficiencies in internal control on enterprise?This paper will expand these studies.This paper collect the information about the disclosure of related report in internal control and deficiencies in it of A-share listed companies of year 2013 – 2015 in Shanghai and Shenzhen Stock Exchange,found that listed companies have disclosed the basic internal control reports almost,but the disclosure of deficiencies in internal control disclosure is not enough,either in its quantity or its quality.At the same time,after studying the previous related studies and combining with asymmetric information theory and effective market hypothesis theory based on the system background of mandatory disclosure of the information about internal control deficiencies mandatory,the paper makes full use of A-share listed companies of year 2013 – 2015 in Shanghai and Shenzhen Stock Exchange as research samples to put forward some hypothesis and establish the regression model,and then uses the method of OLS regression analysis how the disclosure of internal control deficiencies and its correction affect the enterprise value.The results found that: the value of companies which disclose the internal control deficiencies is generally lower than companies which undisclosed internal control deficiencies;the more serious of the deficiencies,the lower of enterprise value;and companies which show that it takes corrective measures against the defect have higher value than companies which fail to take corrective measures.Thereafter,according to the research conclusion,the paper puts forward some policy suggestions expecting to improve information disclosure on internal control in our country.This paper hopes that through the studying about the status of information disclosure of internal control deficiencies and the impact of deficiencies disclosure of internal on enterprise value to make the external stakeholders such as the regulatory focus on information disclosure quality of internal control and urge Chinese enterprises to establish a sound internal control system.In addition,this paper attempts to study the function disclosing rectification measures on internal control of raising enterprise value,to encourage Chinese enterprises to face the defects of internal control and disclose them actively and pay increasing efforts to perfect internal control system,achieving the overall improvement of the management level.In this way,the value of the enterprise enhanced and the capital market environment of our country also improved.