Research On The Relationship Of Effectiveness Of Internal Control And Financial Restatement

In theory,the financial report includes statements,notes to and other information which is the information carrier reflecting the operating status and the results of listed companies.So the quality of the financial report has been one of the focus of scholars and the public attention.Economic globalization is a double-edged sword,on the one hand,the market economy of our country has achieved a qualitative leap over 30 years,on the other hand,the negative effect of the capital market has gradually surfaced,especially the financial restatement of financial report.Frequent financial scandals not only bring economic losses to investors,but also lead to unstable and abnormal transactions in the market,further increasing the pressure on the maintenance of the market order by the government and regulatory authorities.The chain no doubt led the study on the financial restatements by scholar,due to financial restatements exists more in the establishment of a modern enterprise system of listed companies,there is no doubt that the focus of the study lies in the existence of endogeneity between corporate governance and financial restatements,but ignore the company's "keeper",that is the internal control effect.Therefore,this article attempts to explore and reveal the causes and consequences of financial restatements from the perspective of internal control.Of course,the study on the relationship among the structure of the internal control ?financial restatements and corporate governance cannot ignore the environment,the ownership structure is an important part of corporate governance,significantly affect the internal control system is effective.The foreign scholars mostly analyze the relationship between them from the dispersed ownership structure,which is not consistent with the current universal ownership structure.According to statistics,the shareholding structure of Pyramid is a kind of shareholding control structure widely adopted in the governance structure of Listed Companies in china.Under the Pyramid ownership structure,the ultimate controlling shareholders always control management rights and decision-making rights the listed company through the establishment of control chain and hierarchy perplexing.When the ultimate controlling shareholder directly involved in the operation and management of enterprise,which can enhance the degree of the control of the listed companies and then influence the financial report by the channel management.Therefore,this article chooses data of the Sample Firms of Chinese A-Share Listed Companies from 2013 year to 2015 year to implement this empirical test by using thecombination methods of theoretical analysis and empirical pushing derivatives,with the basic theory of internal control of financial reporting and corporate financial statements analysis,do the descriptive statistical analysis on the current status of the financial restatement about Listed Companies in China.Place the Pyramid ownership structure,internal control and financial restatements in a framework,explore the influence mechanism and the influential path between the internal control and financial restatement,and in-depth analysis of the Pyramid hierarchy and chain in regulating effect between the two.The study found that the effectiveness of internal control and financial restatement has significantly negative correlation,namely internal control of the enterprise has a significant inhibitory effect on financial restatement,the effectiveness of internal control is higher,more difficult for financial restatements.