The Empirical Research On The Influence Of Internal Control Quality And Corporate Governance On The Financial Restatement

In recent years,the phenomenon of financial restatement occurs frequently.There are increasing number of financial restatements released on the stock exchange website,whichneed to attract more attention.Relevant studies have found that when agents pursue the maximization of interests,they usually use financial restatement as the main remedy after earnings management.Affect the quality of financial report information.In this process,problems such as internal control defects are generally considered.The internal control system plays an important role in modern enterprise management mode.Meanwhile,the company makes a reasonable and perfect governance system to solve the interests of the stakeholders and domination of stakeholders of the company.Besides,the internal control system also provide the institutional foundation for the establishment of a suitable internal environment.They are closely related and can interact with each other.First of all,this study analysed the relationship between internal control quality,corporate governance and financial restatement on the theoretical level,which intended to make a practical research on this relationship.Then,1303 listed companies of Shanghai and shenzhen mainboard A shares in 2012-2016 were selected as the research object,Hypothesis was proposed,model was established and data were collected.After that,,the quality of internal control and corporate governance factors and the interaction between the two items were applied into the model to test by the method of multiple stepwise regression analysis model.The study found that the internal control quality significantly inhibited the occurrence of financial restatement;Then,corporate governance variables such as equity structure and salary incentive level were introfuced in study.The results showed that the concentration of shares and management compensation incentive were significantly negatively correlated with the level of the financial restatement at 0.01.However,the independence of the board of directors did not play an inhibitory role.The reason may be that the independent directors are not directly involved in the operation of the company,and they cannot play their supervisory role well because of the information asymmetry.In model three,it is found that some corporate governance factors can play a significant regulatory role in the relationship between internal control and financial restatement.Can about the company control of the ability and the adjustment of financial information,such as play a significant role,and a company when corporate governance effect is not obvious in their ability to control the financial inhibition is still obvious,visible to perfect the internal control mechanism of the important role in enterprise management.The research results of this paper can be helpful to the construction and improvement of the internal control and corporate governance system of listed companies,which also offer reference in reducing the occurrence of financial restatement.