Internal Control And Cross-Firm Information Transfer

Improving the quality of accounting information is one of the most important goals of internal control.By providing high-quality accounting information to relevant stakeholders,the information cost can be reduced and information asymmetry can be alleviated,thereby improving market efficiency and optimizing resource allocation.The academic community thus constructed a logical chain of internal control-accounting information quality-economic consequences,and studied the achievement of objectives,implementation efficiency and effectiveness of internal control.However,based on the history of internal control and the quality of accounting information,observations of the economic consequences of internal control are almost always based on the reliability of accounting information.With the continuous development of the market,the content of internal control and accounting information quality is more abundant,and relevant people have put forward new requirements for internal control and accounting information quality.In this context,there may be some limitations in terms of reliability alone,and the interpretation of the economic consequences of internal control may be biased.Based on this,according to the logical chain of internal control-accounting information quality-economic consequences,this paper constructs the internal control-accounting information comparability-economic consequence logical chain from the perspective of accounting information comparability to supplements the existing logical chain of internal control-accounting information reliability-economic consequences.It is helpful to further improve and deepen internal control research and provide a new perspective understand existing internal control economic consequences.Based on the sample of A-share listed companies and the selection of information transfer as the economic consequence,this paper examines the various links of the internal control-accounting information comparability-economic consequence and provides empirical evidence for the entire logical chain.The results show that:First,the improvement of internal control helps to strengthen the accounting information comparability of listed companies.In the process of interpreting the economic consequences of internal control,the accounting information comparability has incremental value compared with reliability.Second,from the process of information transfer,the improvement of the comparability of accounting information helps to improve the efficiency of earnings information transfer between similar companies.From the perspective of the entire logical chain,internal control promotes the information transfer by improving the accounting information comparability.Third,from the results information transfer,the improvement of accounting information comparability can reduce the impact of IPO information on the incumbent companies'stock price.Under the entire logical chain,internal control effectively mitigates this shock effect by improving the accounting information comparability.Thus,this study provides complete empirical evidence for the logical chain of internal control-accounting information comparability-economic consequences and finds that comparability has incremental explanatory power compared to reliability.The innovation and contribution of this paper are as follows:Firstly,the internal control-accounting information comparability-information transfer logic chain is constructed,which complements the logic of internal control economic consequences research.Since the development of internal control is related to investors' concerns about the accounting information reliability,and reliability is one of the fundamental qualitative characteristics of accounting information,the early exploration of economic consequences is mostly based on reliability.As the market continues to develop,the requirements of other stakeholders for the qualitative characteristics of accounting information continue to increase.The research in this paper further promotes the study of the economic consequences of internal control to adapt to the changes in information needs of relevant stakeholders.Secondly,it further enriches the research of influencing factors and economics consequence of comparability.The development of the market has made the range of investors' choices constantly expanding.They often need to compare among multiple targets to get better investment decisions.Therefore,the role of accounting information comparability is becoming more prominent.This paper not only finds that internal control is an important factor affecting the accounting information comparability,but also finds that comparability can effectively promote information transfer,thus further enriching the research of comparability.Thirdly,this paper proves the existence of information transfer in the A-share market for the first time and provides an evidence of influencing factors.The importance of information transfer is reflected in its externality.Different from firm level research,information transfer focuses on interaction between companies.Relevant research can further expand the research scope from firm level to firm-pairs level and even the entire market.This is especially important in the macro background of accelerating capital flows and increasing informationization.In addition,this paper has innovative value in research design.Unlike other qualitative characteristics,comparability is a "relative concept"that focuses on both the comparative subject and the comparative object,so comparability has different decision-making usefulness than other qualitative characteristics.Information transfer is also a "relative concept".The fit of this research design provides a more appropriate scenario for observing comparability and helps to obtain more stable and direct evidence.Finally,this study has reference to practical work.In the current economic downturn,the prevention of systemic risk has become the focus of capital market work,and systemic risk is precisely a type of risk triggered by individuals and quickly transmitted in the market.By studying the information transfer within the capital market,it has reference value for deep understanding of systemic risk,and related research on the factors affecting information transfer helps stakeholders to better identify and prevent systemic risks.