The Study In The Market Respond Of The Information Disclosure Of Internal Control

The research of internal controls and the disclosure of internal control information is one of most important topic in recent years. A series of financial fraud cases occurred continually in big company such as Enron, Worldcom, fully exposed that in a listed company the key management person always override its internal control. As a result, the disclosure of internal control information is just a form. So, the United States issued the Sarbanes-Oxley Act, which required the listed companies to disclosure their internal control information. After this, Japan and other countries or regions' security markets also established their acts of disclosure of internal control. In 2006, the Shanghai Stock Exchange issued its guidelines on internal controls, required the board of the listed companies to disclosure their internal control information at the same time as they issued their annual report. The guidelines also encouraged the qualified listed companies to issue the internal control self-evaluation report separately, and disclosure the Certified Public Accountants' comments about the self-evaluation report of internal controls. The paper based on this, firstly described the disclosure of the internal control information of the A-share listed companies on Shanghai Stock Exchange, then studied the stock markets' reaction about the disclosure of internal control information.The paper finds out that the disclosure of internal control information of listed companies in 2006 is better than last years; then using the Cumulative Abnormal Return method and the Multivariate Regression Analysis to investigate the market reaction on the information disclosure of internal control Our study finds out that compare to the companies which disclosure its internal control information in brief, the companies which disclosure in detail can require Average Abnormal Return and Cumulative Abnormal Return significantly grater than zero during the annual report being issued, so the companies disclosure their internal control information in detail can lead to obvious market' reaction during the information published. Through the regression, we also find that the detail of the information disclosure of internal control has positive relationship with the Cumulative Abnormal Return.As previously studied of the disclosure of internal control information is in the theoretical and descriptive statistical analysis stage, and the paper based on this, Referenced the method which be used to study the capital market's reaction about the disclosure of accounting surplus, the audit opinion and other information, using the Cumulative Abnormal Return method and the Multivariate regression analysis method investigate the market reaction on the disclosure of internal control information and quantitatively studied its information content. Hope this empirical evidence can help to improve our disclosure of internal control information system.