Internal Control, Board Characteristics And Financial Restatement

Financial restatement is related to the quality of financial information of listed companies,which is of great significance to the scientific decision-making of investors and the healthy operation of the capital market.Although there are many factors affecting the financial restatement,it is generally believed that the effectiveness of internal control is one of the most important reasons for the occurrence of financial restatements.In a report released by The Committee of Sponsoring Organizations of the Treadway Commission(COSO)in 1992,internal control is considered as an integral part of modern enterprise management,to ensure the reliability of financial report.Also,one of the objectives of enterprise internal control is the financial report to the outside of the safe and reliable.A share listed on the main board of the company,marking the internal control system in China to establish.In addition,as one of the most important institutional environment for the effective implementation of internal control of the board of directors,in which all the enterprise system implementation and solve the conflicts among different stakeholders is shouldering the important responsibility,having an important impact on the effective implementation of internal control.Based on this,this paper put the internal control,board characteristics and financial restatements in the same research framework to study the relationship between internal control and financial restatements,and further analyze the regulatory role of the board of directors.First of all,this paper reviews the domestic and foreign scholars' research on the motivation,economic consequences and influencing factors of financial restatements,and defines the concept of financial restatements and internal control.Secondly,the paper introduces and analyzes the theoretical basis of internal control,board characteristics and financial restatements.Thirdly,to describe the status quo of financial restatements from 2012 to 2014 Shanghai A shares of listed companies from the year,the number of restatements,the industry's point of view,then in effect on the financial restatement of the internal control research,joined the board of directors of different variables,the characteristics of the board of the relationship between the internal control and the impact of financial restatements.Fourthly,according to the empirical research conclusion,for the listed companies in China to improve the quality of financial information and reduce put forward some policy suggestions on financial restatements.Finally,points out the limitations of this study,such as the financial restatement variable measure is not detailed enough,pointed out the direction for future research.The research of this paper is as follows:firstly,the effectiveness of internal control of listed companies is significantly negatively correlated with financial restatement,and the improvement of internal control quality of listed companies is helpful to restrain the occurrence of financial restatements.Secondly,the smaller size of the board,the chairman and general manager of the two level separation and the stronger the independence of the board of directors of listed companies,internal control,inhibition of financial restatements are more obvious,that is to say good board structure can enhance the inhibitory effect on the internal control of financial restatements.