The Effectiveness Of The Internal Control Disclosure And The Determinants

In2002, the U.S. Congress passed the Sarbanes-Oxley Act (the Sarbanes-Oxley Act) and its Section404requires management and auditors of listed companies to report and certify the internal control, which is the important symbol of internal control disclosure turned from voluntary disclosure to mandatory disclosure. April26,2010, the Ministry of Finance, the Securities and Futures Commission, the Audit Commission, the CBRC and CIRC jointly issued the "internal control supporting the Guidelines", pointed out that, the companies listed in both the motherboard should be evaluated the effectiveness of internal control and reported it since2012. At the same time, the companies should hire accounting firms to audit the effectiveness of internal control and the audit report issued. Thus, the listed company’s internal control information by voluntary disclosure has also gradually transition to mandatory disclosure in china. In a series of institutional change, examining the disclosure of internal control information has important practical significance.Although many well-known scholars already have lots of studies on the disclosure of internal control, which have come to immortal findings and conclusions, but most of these studies are established on the hypothesis that "the information disclosed is real", and no one pointed that whether the internal controls disclosed and the actual existence of internal controls are the same in China. To find out the effectiveness of information disclosed and the influence factor, the paper defined the concept of the effectiveness of disclosure of internal control, which is in the angle of internal control deficiencies.This article is divided into five parts. Chapter I is introduction, which reviews the related literatures and introduces this study’s ideas and main content. Chapter II is the institutional background and related theories, which defined the effectiveness of information disclosure of internal control. Chapter III is empirical study design, which is the most important part of this study. Chapter IV is the empirical results and analyses, which based on the descriptive statistics of main variables. Chapter V is the summary, which explains the future study trends.We find that only14.73%of listed companies disclosed internal control deficiencies in the129listed companies which exit the internal control deficiencies. Therefore, our internal control information disclosed is non-effectiveness. Firm age, change management, institutional ownership proportion, the proportion of managerial ownership, state-owned share proportion, the occurrence of losses and internal control self-evaluation report audit by the external auditors played a catalytic role to the effectiveness of information disclosure of listed companies’internal control.