The Empirical Study On Internal Control Information Disclosure Quality And Agency Cost

Separation of ownership and control in enterprises, formed a principal-agent relationshipbetween shareholders and managers. The principal-agent relationship causes the problem ofagency managers, substantial agency problem is information asymmetry, to solve the agencyproblem will need to spend a lot of cost and agency cost. In this case, the client will ofteninclude reporting system (information disclosure), supervision and incentive mechanism(internal control) and other measures to control and supervise the agents. Enron, WorldComand a series of giant company accounting information fraud have burst, internal control as acontrol mechanism, to ensure that the business activities of the efficiency and effectiveness,asset security, information and the reliability of financial reporting, internal control began tocause the attention of people. While the internal control information disclosure as the capitalmarket access to important information source of internal control of the listing corporation, itsimportance is more and more prominent, the capital market is also an urgent need tostrengthen the disclosure of internal control information. All the countries in the world havebegun to respond to demand and in different extent strengthen the listing corporation’s internalcontrol information disclosure. China has also issued relevant laws and regulations to regulatethe disclosure of internal control information.Based on the entropy weight method and content analysis method, to quantify the qualityof information disclosure of internal control, qualitative analysis of information disclosure ofinternal control quality and relevance of agency cost. And on this basis, using the Shandong Ashares of listing corporation data, the effect of disclosure quality on the cost of the internalcontrol test. Finally, combined with the status quo and empirical test of our internal controlinformation disclosure of listing corporation of the obtained results, the optimization of ourinternal control information disclosure of listing corporation policy recommendations.The conclusion is: the quality of information disclosure of internal control andmanagement expense ratio is negatively correlated, but was not statistically significant, thatthe disclosure of internal control information has no significant inhibitory effect on thedominant agency cost; internal control information disclosure quality and total assets turnover rate showed a significant positive correlation, shows that internal control informationdisclosure of agency costs have inhibitory effect.In addition, through the analysis of descriptive statistics of information disclosure ofinternal control, the internal control information disclosure level is low in China’s listingcorporation, and the listing corporation internal control information disclosure level is uneven,some good and some bad, the difference obviously.