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Research On Internal Control Defect And Market Reaction,the Cost Of Equity Capital

Posted on:2019-04-29Degree:MasterType:Thesis
Country:ChinaCandidate:X J LiFull Text:PDF
GTID:2429330545486288Subject:Accounting
Abstract/Summary:PDF Full Text Request
China's Ministry of Finance,Securities Regulatory Commission,Banking Regulatory Commission,the China Banking Regulatory Commission and the Audit Office(hereinafter referred to as "five ministries and commissions")promulgated the Basic Norms for Corporate Internal Control on 2008,the Supporting Guidelines for Internal Control on 2010 of Enterprises.These two documents stipulate the drape of enterprises.Revealing the content and scope of internal controls.With the development of economy,internal control has gradually become the focus of attention of enterprises.It can be said that internal control directly affects the business results of enterprises.Furthermore,because internal control defects reflect the company's operational risks.It has become an essential factor in the analysis of investors' decisions.Both the normative and the "guidelines" documents provide clear and specific requirements for disclosure of information on internal control defects.Since the defects in the Ministry's control,what are the implementation results of listed companies in China,and what impact does the disclosure of defect information have on the market? What will the disclosure of internal control defects bring to the capital market? Does the disclosure of internal control defects affect the company only for a short time? If not,what is the change in the cost of equity capital as an indicator of long-term impact? The above questions will be the focus of this article.This paper selects Shanghai A shares of 2011-2016 listed companies as the research object,combined with the information disclosure of internal control deficiencies of the policy background,the statistical analysis of the disclosure of internal control deficiencies.Then use the method of event study listed the cumulative abnormal return is estimated by the internal control deficiencies disclosure as the announcement date,the internal control evaluation report disclosure five days before and after the window period,to observe the fluctuation of cumulative abnormal returns,the study found that the information disclosure of internal control deficiencies will bring negative effects,the market reaction is negative,but the duration is not long.In order to solve the defects of internal control disclosure effect.This paper introduces the variable of equity capital cost,and empirically studies the relationship between the defect of internal control and the cost of equity capital.It is found that the disclosure of information about internal control defects will increase the cost of equity capital.Inview of the different levels of internal control defects,the text also discusses whether the degree of internal control defects will affect the cost of equity capital.The results show that the degree of internal control defects can not significantly increase the cost of equity capital.
Keywords/Search Tags:internal control defect, event research method, market reaction, equity capital cost
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