Research On The Market Reaction Of Internal Control Self-assessment Report Disclosure In Our Country Listed Corporation

U.S. emergency promulgated the SOX after the outbreak of the financial scandals in Enron and WorldCom. The SOX bill has one of the most important provisions of Section404, the provision clearly the responsibilities of the Company’s management and external audit institutions and finance-related internal control,mandatory disclosure of senior management in the annual report at the same time each year disclosure and financial reporting related to internal control evaluation, and this evaluation report must also pass an external audit of Certified Public Accountants. The disclosure information of internal control in United States become from it into a mandatory disclosure. The United States want the bill enacted to solve the problem of its listed companies’ financial fraud and management override of internal control over. Of course, the listed company’s financial fraud and corruption problem does not only occur in the listed companies in the U.S., and also appear in other countries. The Netherlands, Hong Kong, Canada, Singapore, Japan, Britain and other countries have also strengthened the importance of internal controls and internal control made a series of regulations and requirements after the United States enacted the SOX. China also began to focus on internal control while other countries are concerned about the internal controls.China begin to make a series of internal controls provisions after he Commission issue a "public offering of securities of the Company Disclosure Rule"in2000. And promulgate the "basic norms of internal control"in2008, and he Joint Commission of the Ministry of Finance, China Banking Regulatory Commission, the Audit Commission and the Insurance Regulatory Commission issued the "Guidelines for Enterprise Internal Control" in April2010. The guidelines are firstly executed in Domestic and cross-listed companies since early2011and fully implemented in central and local state-owned holding listed companies listing on the Shanghai and Shenzhen city. The guidelines require the full implementation of the internal control system of norms of the company, and disclosed in2012annual report, at the same time, the Board must disclose the company’s internal control self-assessment report and a financial report certified public accountants internal audit report. And require other listed companies implement the relevant requirements in2013and2014, within the time limits prescribed, encourage companies to voluntarily advance the implementation of the internal control system of norms of disclosure requirements. China began a voluntary disclosure of internal control from stage to mandatory information disclosure stage.Perfect internal controls not only provide protection for the production and management of listed companies, but also for investors provided the basis for investment decisions. Voluntary disclosure detail, full and complete description of the internal control information can control its internal corporate managers are confident to a certain extent, you can also explain the company published financial report is a certain guaranteed from an investor’s point of view. This is to give the market a good new, and can enhance investor confidence in the company. From the company’s point of view, as the company continues to grow, companies not only need good performance and broad prospects for development, also need to have a sound internal control system to ensure the company’s normal production and operation, safe and reliable assets, financial reporting. From the perspective of regulatory perspective, internal controls by requiring companies to disclose information, regulators can learn from the information disclosed in the company’s compliance with the requirements related to the operation of the guidelines.At present, China scholars study focused on three aspects. Firstly, the disclosure of internal control information whether can cause a reaction of the market, the disclosure of internal control information whether has information content, the majority of studies show that public disclosure of internal control information can produce a market effect and cause market reactions that have information content. Secondly, study what factors are affecting internal control information and voluntary disclosure and level of voluntary disclosure in the voluntary disclosure phase. Thirdly, study on the framework and methods of internal control evaluation and how to improve the internal control information disclosure. And most are in the research phase of an internal control voluntary disclosure of information, and less on research and mandatory disclosure stage. The promulgations of "Internal Control Basic Standard" and "Enterprise Internal Control Guidelines" make our internal control disclosure of information into a mandatory disclosure stage. So this article study of its internal information disclosure system of internal control and information content market response information basing on the data of the Shenzhen A-share listed company on the Main Board in2012.This paper mainly act the Signaling, Asymmetric Information, Agency, Efficient market Hypothesis and stakeholder theory as the basic theory. Research the information of internal control self-assessment report disclosed by listed companies in Shenzhen A-share market motherboards in2012. The Data are from the research database of CSMAR series, while major event announcement or quarterly bulletin information before and after Disclosure of internal control self-assessment report.In this paper, we choose event study when study information content of internal control. Determine whether there is information content of internal control self-assessment report by the average excess return, cumulative abnormal return of change and One-Sample T-test in the event period. The average excess return and the cumulative excess return rate could be satisfied with significant T-test in some windows through computational analysis, found within a short period of time before and after the disclosure.In order to exclude the influence of other factors on the stock price, this paper will make a multiple regression analysis to further verify the factors causing the market reaction is weather come from internal control self-assessment report disclosed by the Company. Through regression analysis, we find that internal control information has an information content disclosed by board in Shenzhen A-share market through regression analysis, although information content is limited.This article includes a total of seven chapters, and the main content of each chapter is as follows.The first chapter is an introduction. This part states the research background, significance, main research contents methods and frameworks and so on. Meanwhile, point out the deficiencies and innovation of this paper with the actual situation in this paper research.The second chapter is a literature review. In this part, this article shows the changing process of information disclosure system of internal control. And recall the study on the market of Information disclosure of internal control and internal control self-assessment report and factors influencing the Information disclosure of internal control.The third chapter is the theoretical analysis. This part is the introduction of relationship between information of internal controls disclosure with the theories of Agency, Asymmetric Information, Signaling, Efficient Market Hypothesis and Stakeholders.The fourth chapter is to disclose the status and make assumptions.In a strong and effective stock market, the stock price can react promptly disclosed and undisclosed inside information according to the efficient capital market hypothesis theory. In a semi-strong efficient stock market, stock prices will react in a timely manner that it has disclosed the relevant information, such as price and trading volume of securities transactions and other historical information. In1999, the research in China’s stock market of scholars Shen Yi Feng finds that China’s stock market is a semi-strong form efficient market. Therefore, when China’s capital market is a semi-strong efficient market, the stock prices of listed companies can make a timely and effective response. Once listed companies disclose their internal control relevant information, such as internal control self-assessment reports or audit reports, will cause the attention in investment and the stock price will be affected too. Summarizing the above analysis, in this paper we put forward a hypothesis that the control self-assessment report contains information content and can cause market reactions disclosed in our internal board in Shenzhen A-share listed companies.According to Signaling theory, in an efficient market, the market has enough inherent power to procure good company to disclose the good news. Because market will make a positive response to the company disclosing good news by upgrading the stock prince, Otherwise make no response and keep prince, and even leave the company’s stock price fell for disclosing bad news. Empirical studies find, in Voluntary disclosure of internal control information phase, no serious problems of internal control companies tend to disclose internal control report because management considers the voluntary disclosure of information is an effective tool to reduce the cost of capital. According to self-selection theory, also believe that the company without serious internal control problems will be more willing to disclose internal control report in the voluntary disclosure of internal control information stage. If requiring mandatory disclosure, company existing internal control deficiencies will still disclose sound internal control report before unimproved the internal control, so enforcing companies to disclose their internal control report does not necessary to improve its internal controls and financial condition. Therefore, compared with the mandatory disclosure, investors will be more optimistic about the voluntary disclosure. So summarizing the above analysis we put forward another hypothesis that the internal control self-assessment report by Mandatory disclosure brings less non-normal cumulative gain to the company than by voluntary disclosure.The fifth chapter is the studying and designing. Describe the data sources and the sample’s selection process, as well as the event study formulas and the procedures to be adopted.The sixth chapter is the empirical analysis and conclusions. Make a study conclusion and a comprehensive analysis by the empirical research for data published by listed companies and the test for model.The seventh chapter is the policies and proposals. This section is to make some comments and recommendations based on the article concluded.This article’s highlight is as follows. With voluntary disclosure of information in the system of internal control, mostly through the sample companies into voluntary disclosure of internal control information group and groups to undisclosed information, or by the sample companies detailed disclosure of internal control information into groups with simple comparative study groups to disclose internal control information content information when the past scholars study the market response of the control of internal information. The article is based on the central and local state-controlled listed companies in Shanghai and Shenzhen A-share listed on the Main Board of the city and force disclosure of information of the Internal Control in2012. Conduct a more in-depth content analysis of mandatory disclosure group and the content of internal control information of comparative study in Voluntary disclosure group and the information of control Internal disclosure On the Shenzhen A-share listed company on the Main Board. At the same time, make an empirical research for market reaction of information of internal disclosure.