Internal Control Voluntary Disclosure And Its Continuity Based On Psychological Contract Theory

Internal control is the core of corporate governance, it directly related to the effectiveness and efficiency of the company’s operations. listed companies disclosure about internal control information have many ways, but we select internal control self-evaluation report with a certain format and specific content. With the release and implementation of the "Basic Norms of Internal Control" and "Evaluation of Internal Control Guidelines", indicating that the disclosure of internal control of listed companies are more and more attention in recent years. However, these regulations have more guiding opinions and fewer mandatory requirements, so as of December31,2010, China’s relevant laws and regulations on internal control information disclosure of listed companies is still in the semi-compulsory stage. The paper studies is in the voluntary disclosure stage, and to find the factors which affect the continuous disclosure of internal control information. The paper chose the internal control self-evaluation reports of Shanghai Stock Exchange’s listed companies from2007to2010as a sample, can be found through the analysis of the samples during the financial reports of listed companies, some listed companies have been disclosed the internal control self-evaluation report continuously, and there also have some companies disclosed information is not continuous.Based on this phenomenon, we based on a management concept-psychological contract to study the reason that listed company is not disclosure of internal control self-evaluation report continuously, and we take some factors which effecting the internal control quality into account, researching the impact to continuous disclosure. From the descriptive analysis of listed companies in the sample period, although the number of disclosure of internal control self-evaluation report is improved, but there are still a lot of problems on the format and content. Internal control information disclosed by listed companies in China are too formal, and the format is not unified, and lacking substantive content. From the empirical results of the regression, the psychological contract between the listing of the company’s management and investors is exist, that is to say whether or not to disclose internal control self-evaluation report in2007has a significant impact on continuity disclosure for listed companies in2008-2010. Company’s asset size, profitability, and the life of the company has a significant impact on continuous disclosure of listed company, and the larger the size of the company, the stronger profitability and the shorter of the life of company, the more likely to continuous disclosure of internal control self-evaluation report. In addition, the top ten shareholders of the company stake as well as the company’s financial reporting audited by the Big Four accounting firms have related to the continuity of the company, but its impact was not significant. The level of the company’s financial position, the proportion of independent directors and the company’s future financing needs, however, did not affect the continuity of the company’s disclosure.