The Studies Of Disclosure Of Internal Control Audit Report And The Decision-making Usefulness Of Equity Investors

With a series of financial fraud scandal breaking out at the beginning of this century in United States of America such as Enron and WorldCom, the problems of internal control information disclosure attached more and more attention. In July2002, the United States congress issued The Sarbanes-Oxley Act of2002, clearly put forward company needs to hire a certified public accountants audit the internal control and disclose internal control audit report. Five ministries and commissions in China also issued The Internal Control Audit Guidelines on April26,2010, that make our country enterprise internal control information disclosure from the voluntary disclosure of excessive to the mandatory disclosure of a new stage of development.Internal control audit is refers to the certified public accountants to audit the effectiveness of the specific base date (e.g., at the end of December31) financial reporting internal control design and implementation, also noted in the audit of internal control disclosure related major deficiencies in financial reporting, the auditing opinions on internal control effectiveness needs to study long enough to draw conclusions. Therefore, either from the perspective of content or scope, disclosure of internal control audit report can be reasonably to ensure the authenticity and reliability of financial information, also can provides incremental information for equity investors, help to equity investors more understand the real situation of enterprises, can weaken the enterprise internal and external information users degree of information asymmetry. Making equity investors’ investment decision more rational and curb their speculative behavior, standardize the role of the capital market.Many scholars also verified by empirical studies of disclosure of internal control audit decisions are useful to investors. At present the study of the disclosure of internal control audit report and decision usefulness of research has just started in China. So the purpose of this study is:Since the implementation of The Internal Control Audit Guidelines issued in China, if the disclosure of internal control audit report will causes the attention of equity investors, causes the corresponding market reaction? How to affect the equity investor’s decisions?This paper adopts the method of combining normative research and empirical research to analyze the purpose of this study gradually. First of all, starting from the institutional background and the reality in China, theoretically analysis the disclosure of internal control audit report should be able to cause the attention of equity investors, and be able to influence its make more rational investment decisions quickly and significantly; Second, descriptive statistical analysis to our country enterprise of disclosure of internal control audit report, in order to illustrate whether the sample is representative; In the third, combined with relevant theoretical analysis, empirical research design, and carry on empirical test. Including:design event studies, verify whether the disclosure of internal control audit report to cause the attention of equity investors, influence the rational decisions; Design multivariate regression analysis, makes a research on the disclosure of internal control audit report equity investors investment decisions have how of influence; Finally, put forward the research conclusions, policy recommendations in this paper.Through the study of these problems, hope to be able to provide more available information for equity investors, to facilitate the timely and rational decision-making and curb their speculative behavior; At the same time also hope to be able to provide relevant information for regulators, to facilitate the enterprises to regulate, protect the interests of investors, so as to formulate and implement the corresponding specifications, policies, and regulating the capital market.This article is divided into seven chapters, specific content as follows:Chapter I:IntroductionThis chapter mainly from the problems put forward, topic goal and significance of this article, research contents and methods of several aspects. Internal control audit report is important information for equity investors, study the relationship between the disclosure of internal control audit report and equity investors" decision usefulness, have certain theoretical significance and practical significance. Chapter Ⅱ:Research summaryThis chapter respectively from the aspects of disclosure of internal control audit report and the disclosure of information and decision usefulness of combing and summarizing the literatures at home and abroad, and puts forward the existing problems, which leads to the research in this paper.Chapter Ⅲ:Basic concepts and theoretical analysisThis chapter mainly introduces the related concepts of internal control and internal control audit and its role, to define the relationship between the internal control audit and financial statements audit, put forward the theoretical basis for this article, the efficient-market theory, principal-agent theory, asymmetric information theory and signal transmission theory, the correlation analysis. This chapter put forward a certain theoretical basis to design section assumption for chapter Ⅴ.Chapter IV:The statistical analysis of listed companies to disclose internal control audit reportIn this paper, there is statistical analysis of listed companies to disclose internal control audit report after promulgated "Enterprise Internal Control Application Guidelines" in2010. The results showed that in the past two years the disclosure of internal control audit report of the company, from two aspects of quantiry and proportion are on the rise. So the sample is representative.Chapter V:The empirical study designThis chapter mainly introduced the establishment of the assumptions, using the research methods and data sources and sample selection process. Before research hypothesis chapterⅢ, on the basis of the theory7analysis combined with the purpose of this study, four hypotheses are put forward. In research methods section. event study design was introduced in detail, including the definition of variables and model selection, the determination of event day and the time window length and matching group design, using the SPSS17.0software to pairs for single sample t-test and paired sample t-test.In multiple regression design part mainly deals with the variable definitions of multivariate regression analysis and model selection.Chapter VI:Empirical test and result analyzing Using the event study method, concluded that failure to disclose the internal control audit report has a significant market reaction, and CAR symbols and earnings per share rate of the same sign. To verify the enterprise disclosure of internal control audit report to cause the attention of equity investors, and weaken the significance of market reaction. Regression results show that the cumulative abnormal returns is negatively related to the whether the disclosure of internal control audit report, the report revealed a different time window, the effect of significantly different, and this effect as the extension of time window significantly step by step.Chapter Ⅶ:Research conclusions and policy suggestionsCombined with the previous chapter in this chapter the empirical test results, analyses the reasons for this conclusion, and puts forward some policy suggestions, at the same time put forward in this paper, the innovation and deficiency. This article innovation place mainly is:matching analysis of sample data is more comparable; cumulative abnormal returns index calculation to facilitate comparative analysis of this article; At the same time the article also the following deficiencies:The time to choose the sample data is shorter; only to whether disclosure of internal control audit report as a independent variables; influence factors when the choice is not comprehensive. Finally, this paper presented some Suggestions for future research and policy advice.