Study On Market Reactions To The Disclosure Of Auditors' Internal Control Report Of Listed Companies In China

In June 2008, the Ministry of Finance and other four ministries jointly issued "The basic norms of internal control", the situation presents an excellent opportunity to study on market reactions to the disclosure of auditors'internal control report. In this paper, the data is choose from the auditors'internal control report of the 291 listed companies disclosed from ShenZhen and ShangHai stock exchange for the period of 2007 to 2009. The control sample is selected that have similar asset scale in the same industry. The event study method has been used to calculate and study the cumulative abnormal returns in sample companies. Comparing the difference of the cumulative abnormal returns of study sample and control sample between before and after the disclosure of auditors'internal control report, we can conclude that it will show significant differences in short time before and after the announcement date. But the study sample is not significantly higher than the control sample in longer time before and after announcement date. The results of multiple regression analysis showed that disclosure of auditors'internal control report does not affect the cumulative abnormal returns and auditors'internal control report do not have the useful information. Thus, this paper presents the content and the format of standardized disclosure of auditors' internal control report. Then the writer proposes three proposals of strengthening internal control disclosure guidance and supervision in order to give some experience basis to disclosure of internal control of our country.