An Empirca1 Study On The Re1ationship Between Governance Effects Of Internal Audit And Transparency Of Listed Companies

Tricker, a famous corporate governance expert, has said, the 21st century is an century for company governance. Under the sustainable development environments of corporate governance, internal audit is confronted with challenges from two dimensions: firstly, the development of internal control requires, the objects of internal audit shouldn't be limited to"money and finance", instead, the responsibility and authority of internal audit should cover more management field. Secondly, the expansion of corporate governance function requires, internal audit is hope to be responsible for stockers,persons with Interrelated Interests and the society, not only for senior management of listed company. As Norman Marx has said, there is noThe important role of internal audit function (IAF) in corporate governance has been recognized in the academic circles, and the perspective that corporate governance is comprised of four cornerstones: the IAF and the board of directors, senior management,external auditing has been gradually accepted by an ever increasing number of people. But,there are still some questions. What kind of role the IAF plays in corporate governance,where it can be found, whether the IAF gives a full play under the current corporate governance mechanism,whether the relationship between the IAF and the other three corporate governance parties improves the quality of governance and so forth. There questions are lack of enough theoretical foundation and empirical research at the present literature. Accordingly,the answers to these questions will help enhance understanding the role of the IAF in corporate governance and have great theoretical and practical significance to further enrich and extend the research of the IAF, strengthen internal auditing practices and improve corporate governance.Based on the organic combination of accountability theory, corporate governance theory and internal audit theory, this research establishes a theoretical frame work of governance effects of the IAF. On the one hand, internal audit realize governance effects through its development, on the other hand, the interactions between the IAF and the board of directors senior management, external auditing help with bringing about governance effects.According to the current environment of China, based on 2009 annual data from the listed companies of main board market in Shenzhen Stock Exchange,we analyzed the effect of internal audit's position, resource and duties on the transparency of listed companies, then computed comprehensive strength of internal audit with these three aspects, examined the effect of internal audit, the interactions between internal audit and the board of directors senior management, external auditing on the corporate governance.The results show that l) nowadays, the position of internal audit in company has been greatly promoted, most of them subordinate to audit committee and are required to report to the board of directors or audit committee, but its duties couldn't meet the need of corporate governance, the degree of participation in risk management is very low; 2) the higher of internal audit's position the wider of its duty scope, then transparency will be better. The interactions between internal audit and the board of directors, senior management, external auditing on the transparency of listed companies.According to the result of theoretical and empirical analysis, this section puts forward some suggestions about how to promote the governance effect of internal audit: l) strengthen the interaction between internal audit and the board of directors, senior management, external auditing, the key is promote the position of internal audit, create an win-win relationship between internal audit and senior management, increase the information communication between internal audit and external audit; 2)pay more attention to self-construction of internal audit, set the internal audit department under the board of directors both in organization and report relationship, broaden the scope of internal audit's responsible.