Study On The Economic Consequences Of Internal Control Deficiency Disclosure Of Listed Company

In an increasingly complex market environment, the degree of improvement ofcorporate governance structures and mechanisms, the quality of accounting informationlevel, will directly affect the interests of investors and other stakeholders in the scientificdecision-making. Internal control deficiencies disclosure would expose the problems withinthe enterprise, and therefore tend to conduct a cover senior executives, and investors thereis a huge demand for such information. Financial adviser believes that the disclosure ofinternal control deficiencies of the company, investors will demand a higher risk premium.And credit rating agency also pointed out that in the rating process, internal controldeficiencies disclosure is an important consideration. Therefore, disclosure of internalcontrol deficiencies have an important impact on the business, and will produce a series ofeconomic consequences, benefits and this is business stakeholder widespread concern. TThe disclosure of internal control deficiencies economic consequences not only helpsregulate the internal control information disclosure of listed companies, but also effectivelyprotects the interests of investors and other stakeholders. Moreover, the regulatoryauthorities to develop policies will have a positive effect. It also helps CPA for self-evaluation report issued by the management audit.With the full implementation of "basic norms of internal control", and "evaluation ofinternal control guidelines" and "internal control audit guidelines" issued, China willencourage the defects of internal control disclosure. Provides data control defects Chinaenterprise a lot of this in the future, has the certain practical significance. This paper firstlyreviews the internal control regulations, can reflect our country in recent years is increasingrelated internal control system construction, urge the listing Corporation for the disclosureof internal control defects. Secondly, analyzes on the present situation of internal controldeficiencies disclosed in2011and2012, self evaluation report of the disclosure of internalcontrol deficiencies, internal control in2011and2012as the sample selection, throughcross analysis in different industry and different kinds of defects, found that the defects ofinternal control information disclosure level of China is still very backward, but has beensome characteristics of the industry. Then based on the empirical study on the defects ofinternal control disclosure of the economic consequences, it mainly carries out from thethree aspects of the cost of equity capital, audit fees and the value of the company. After theinspection found, the defects of internal control information disclosure is related to the costof equity capital, associated with audit fees change of negative, positive correlation with thecompany value. In view of this, the management should actively disclosure of internal control information of defection; improve the quality of information disclosure of internalcontrol. Suggest the relevant regulatory authorities to increase inspection efforts, improvethe system specification. At the same time, investors should be rational treatment of thiskind of information disclosure, and supervision. Compared with the research in Chinabefore, are the defects of internal control disclosure as a measure of internal controlinformation quality, into the internal control score reflects, rarely use it as a separate factorof. And after the "basic standard" implement, research begin on the defects of internalcontrol disclosure. Research also can reflect the effect of relevant legal norms. Finally, anempirical study on the defects of internal control disclosure of the economic consequences,especially in the study of defects of internal control disclosure on the cost of equity capitaland audit fee changes, also emphasizes the advance ideas, the few people on this.