Research On Capital Market Reaction To Information Disclosure Of Enterprise Internal Control

Since American promulgated the Sarbanes-Oxley Act in the early21st century, internal control has begun to cause the extensive concern around the world. In recent years, theorists and the practical realm in China have also begun to be devoted to the study of internal control, especially, the releasing of the enterprise internal control basic standards in2008and the related guidelines in2010have marked that the enterprise internal control system is basically completed. These standards and guidelines have not only provided policy guidance for the formulation and execution of enterprise internal control, but also put forward strict requirements for the information disclosure of internal control. This means that in China, the information disclosure of enterprise internal control has gradually transited from voluntariness to enforcement and the disclosure quality has already attracted people’s high attention. On this occasion, in this paper, the research on information disclosure of the listed company’s internal control and so-caused market reaction will be of great theoretical and practical significance.Basing on the standards and guidelines, we construct an index system about the information disclosure of the internal control, and then with this system grade the reports of the internal control self-evaluation of the companies which are listed at home and abroad at the same time in2010-2011. Then, combining event study, we examine the market reaction to the information disclosure of internal control, and find an abnormal phenomenon that at present China’s the disclosure quality of enterprise internal control information and stock price are negatively correlated. In the end, we find the reasons for this phenomenon and put forward some responding policy recommendations, hoping to provide powerful guidance for other listed companies that will enforce mandatory information disclosure of internal control and relevant policy-making departments.The full text is divided into five chapters. Chapter Ⅰ is the introduction, which mainly introduces the background and significance of the research, literature review at home and abroad, the research ideas and methods, and the innovations and shortages. Chapter Ⅱ is the content and present situation of the information disclosure of internal control. This chapter first introduces the meaning and content of the information disclosure of internal control, and then expounds the present disclosure situation from both listed companies in general and the companies which are listed at home and abroad at the same time. Chapter Ⅲ is the theoretical analysis of the market reaction to the information disclosure of internal control, which, basing on the theory foundation of the market reaction to the information disclosure, finds out the correlation between them. Chapter Ⅳ is the empirical analysis of the market reaction to the information disclosure of internal control, which includes the putting forward of the research hypotheses, samples selection and data sources, research methods and variable design and model building, then the empirical analysis, and last the robustness test. Chapter Ⅴ is the conclusions of this paper and corresponding policy recommendations.The main conclusions we get from this research are as follows:First, the information disclosure level of internal control (ICID) in companies which are listed at home and abroad at the same time in2011is notably higher than those in2010. Second, the information disclosure of internal control provides incremental information which finds expression in the fluctuations of stock prices. Third, the ICID is negatively correlated with the cumulative abnormal return, and the correlation appears only in the days before the information disclosure of internal control and in the days after the event there are no significant findings. Last, in contrast to the mandatory information disclosure, the voluntary one has more value relevance, and the market reaction to it is fiercer, and can better provide the investors with additional decision-making useful information.