Research On The Effectiveness Of Regulatory Penaltise On Listed Company

Market irregularities is always a focus in academic circle and practice circle, numerous studies have shown that, internal control can effectively reduce the probability of market irregularities; However, whether irregularities will actively take measures to strengthen internal control after the fraud detection, regulatory punishment is effective? Existing literature on research findings of regulatory effects were described as "benevolent see benevolence and the wise see wisdom", research methods are also different.See from the subsequent changes of the effectivensee of internal control, this article starts with the fraud detection and analyses subsequent changes of internal control of the fraud firms in order to test regulatory effects. First, this article elaborates the research background and significance and then points out the content and the innovation feature after introducing the literature review. Secondly, the basic theory. In this chapter, firstly, from the perspectives of Principal-agent Theory, Efficient Markets Hypothesis and Investor Protection Theory, we analyses the necessity of regulatory punishment. Then from the perspectives of Credit Mechanism Theory and Signaling Theory, we analyses subsequent changes of the effectivensee of internal control of fraud firms. Based on the theory, fraud firms will actively take measures to strengthen internal control after the fraud detection in order to re-establish the corporate image and restore investor confidence. Thirdly, this artile presents the system background, including the regulatory system of listed companies, irregularity responsibility and building process of internal control. Understanding the relevant system makes contribution to a better understanding of the subsequent changes of the effectivensee of internal control and make right judgment of regulatory effects.In the empirical study part, with the collect data of public companies punished by Ministry of finance, SEC and the Exchange from2007to2009and the paired samples, using Paired-Sample T Test, we discuss the changes of internal control from the first year before the fraud detection to the third year after the fraud detection. Separately, we discuss the changes of effectiveness of internal control overall objective, effectivensee of internal control over strategy, over operation, over reporting, over compliance and over asset security. And we do robustness test by independence and professional information of the audit committee. Through the above researeh, the dissertation has drawn the following conclusion, from the first year before the fraud detection to the third year after the fraud detection, the changes of the effectiveness of internal control overall objective, of effectivensee of internal control over reporting, over compliance and over asset security are significant. At the first year before the fraud detection and the year of the fraud detection, there is significant difference between the fraud firms and the control firms. At the first year after the fraud detection, the effectiveness of internal control of the fraud firms show substantial growth, and keep steady growth at the the second and the third year after the fraud detection. At the third year after the fraud detection, the fraud firms become similar to the control firms. That is, the fraud firms take actions to improve their internal control, regulatory effects is effective. Finally, this artile summarizes the research findings, puts forward targeted suggestions and expounds the limitations of this artile and further research directions.