The Correlation Study On Internal Control Report Disclosure And Corporation Operational Performance

In2002, the United States issued the Sarbanes-Oxley Act. It has brought huge changes to the listed(public)corporations and the capital market. The SOX-404Act which has attracted much attention highlighted the importance of internal control information disclosure and held the point the internal control and its disclosure should be implemented as a mandatory provision. Since then, internal control information disclosure has been discussed both in theory and in practice.In the year of2011, there are68companies which have listed in both domestic and foreign market beginning to follow the standards of internal control and the supporting guidelines documents. These68companies are called "mandatory adoption". To meet the requirements, listed corporations must disclose two reports of internal control. They are internal control self-assessment report and the internal control audit report. And there are other216companies called "voluntary adoption" disclosing internal control reports voluntarily. Internal control report is the main way of the information disclosure of internal control. It can combine the enterprise itself with the external market and the supervisor. This paper is to study the correlation between the internal control report disclosure of listed corporation and the operational performance.Three main purposes of this paper are as following: The first one is to discuss the correlation between voluntary disclosure of internal control report and the operational performance. The second one is to analyze the correlation between the disclosure form of internal control report and the operational performance. The last one is to study the correlation between the disclosure quality of internal control report and the operational performance.Finally, we conclude the results like this:(1)Voluntary disclosure of internal control report is positively associated with the operational performance. Compared to the mandatory adoption companies, the voluntary has better operational performance. (2)Disclosing two internal control reports at the same time is positively associated with the operational performance. Compared to the disclosure of only one report, disclosure of two reports can bring better operational performance.(3)The disclosure quality is positively associated with the operational performance. Higher disclosure quality can bring better operational performance.The main innovations of this paper are as following:(1)The samples are newer and the research is further. We select companies included both voluntary adoption and mandatory adoption which follow standard disclosure of internal control reports. These samples are different from the ones selected in the other research. What’s more, this paper also analyzes the correlation between disclosure form (disclosure quality) and operational performance. The previous research hardly discussed these three questions at the same time.(2)The point is newer. The previous research has paid more attention to the stock price reaction to the disclosure of internal control report. Althought operation objective is one of internal control objectives; it is hardly discussed by scholars.The conclusion of this paper can make listed companies pay more attention to the disclosure of internal control report and improve the internal control quality in order to gain better operational performance.