An Empirical Study On The Information Content Of Internal Control Quality In Financial Restatements

The financial report is the key carrier of financial information that disclosured by a company to the outside world,is a true reflection of the enterprise's financial position and operating results,is an effective way for investors,creditors and other stakeholders to learn about the situation of the enterprise.However,in recent years,there are all kinds of correction notice about the financial report frequently appeared in people's sight.The public start to questioned the authenticity and reliability of the financial report.On the one hand,financial restatement will affect the investment decisions of investors,on the other hand,the enterprise's market value will drop to a certain extent after financial restatements.These may damage the interests of investors,and affect the capital market resource allocation function.However,nowadays the accuracy of the prediction model of financial restatement is not high.In this case,it is very important to find more important factors to refine the model to improve the accuracy of prediction.In this paper,we still use the Logistic regression model to realize the prediction of financial restatements.And,on the basis of the previous prediction model,we try to add the internal control variables to refine the model.Through the regression process,we can see the higher the quality of the effectiveness of internal control,the less probability to financial restatements,and internal defects will reduce the quality of accounting information.The results show that before adding the internal control variables,the prediction accuracy of the model is 58.5%.After adding the internal control variables,the prediction accuracy of the final model is 62.6%,It reflects the quality of internal control has a high content of information in the prediction of financial restatements.