Whether Chief Internal Auditor Resignation Has Information Content

With the outbreak of financial fraud scandals such as Enron and WorldCom in the United States at the beginning of this century,the management of the company faced a serious crisis of trust.Corporate governance and the process of reporting financial reporting outward began to be closely reviewed and supervised.As one of the four cornerstones of corporate governance,the effectiveness of internal audit operation became a focus of attention.Due to the difficulty in obtaining the data of internal audit,there are few studies on internal audit.The main literature focuses on theoretical analysis,while empirical research focuses on the effectiveness of internal audit governance.However,there is little research on chief internal auditor.A small amount of this literature mainly focuses on the personal characteristics of chief internal auditor.There is little relevant empirical evidence about the market reaction to the resignation of chief internal auditors at home and abroad.Under this background,we use empirical research methods,and the information on the resignation of chief internal auditors including in director's report or chief internal auditor exchange report from the Shenzhen Stock Exchange in 2013-2017 as a research sample,and a paired sample of companies with the same year,the same sector,the same industry,and the same trading day.We find that the listed company from which the chief internal auditor resigns and leaves has a significantly negative market reaction on the day and the following trading day.However,after the resignation of the chief internal auditor,the listed company that continues to provide other positions has a significantly positive market reaction in a number of short-term event windows.In addition,the listed company that does not indicate whether the chief internal auditor leaves or stays after resigning has no negative significant market reaction.Based on the research conclusion,we put forward corresponding policy recommendations.