Positive Disclosure Of Internal Control Information Influence On The Value Correlation Of Earnings

With the series of exposures about financial fraud, business failure caused by the deficiencies and failure of internal control, internal controls caused increasing and widespread concern,.For a time, the internal control appears to be an umbrella to insure the accuracy of corporate financial data, and the Sustainability of management. We also timely to establish an internal control system of norms to guide companies to gradually establish a sound internal control system. However,because internal control work inside the enterprise in all daily work activities, so the outside world is difficult to determine the level of the actual level of internal control. Therefore, in order to reduce information asymmetry, to maintain market order and protect the interests of investors, regulators encourage listed companies to disclosed the conditiong of internal control.And,in order to declare their performance of duties, create a good image, listed companies has the responsibility and motivation to disclosure the information of internal control to the market.At this stage, China's listed companies' disclosures of information are mostly in the form of internal control self-evaluation report, and relatively small number of companies have disclosed the firm's internal control attestation report made by the CPA. These disclosure of internal control information in this study, we found that all of the internal control self-assessment report will make the statements such as"internal control design, operating effectively, no major flaws," and internal control attestation report made by the CPA are almost standard report, only a very few companies have been issued with emphasis of matter paragraph. Previous studies have shown that the more transparent information disclosure and the higher the quality of financial information will make investors using more fiancial data to make their investment decisions.(in particular the earnings data). So the market can be more conducive to allocate the resources efficiently,and then be more conducive to economic development. So, can these positive informations about internal control improve the value relevance of earnings data?In this paper, we theoretically analyse the disclosure of internal control can reflect the company's actual level of internal controls, and the disclosure of internal control, as an effective market signals, can affect the capital market to use financial data, especially to use of earnings data for decision-making, ultimately reflected in the stock of listed companies.It is to say that the disclosure of internal control of listed companies can affect the value relevance of earnings; then on the basic statistical description of the dislosure conditiongs, we introduce proxy variables of the internal control disclosure situation to ohlson model and revenue model, to study the effects on value relevance of earnings. Finally,wo improve that the disclosure of internal control information can really affect the value relevance of earnings, and the effects of verification report is stronger than the influence of self-assessment report in China's capital market.