An Empirical Study Of Internal Audit Quality’s Influence On The Value Of Listed Commercial Banks

At the beginning of the century, the exposure of a series of financial scandals, made the scholars focus on internal audit. As an important part of corporate governance structure, internal audit is a fundamental section of internal control. SOX indicated that internal audit is one of the four cornerstones of corporate governance. Internal audit and corporate governance are supplement each other, corporate governance is the institutional environment of internal audit playing role, and internal audit is the effective guarantee of corporate governance. The appearance of internal audit is the requirements of the times, and the inevitable result of internationalization process speeding up and business environment changing. The Institute of Internal Auditors (IIA) modified the definition of internal auditing for seven times, which confirmed the footprint that internal audit function changed. IIA proposed that internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations in1999. The new definition put internal audit to a new level, and then theorists began the study of internal audit value-added. How to make internal audit work efficiently and add value for organizations to the greatest level became a hot topic in theoretical circles. This paper examines whether higher internal audit quality could add value, and helps to strengthen listed commercial banks’ performance.This paper, based on the evolution of the definition of internal auditing and the basic theory of internal audit and listed commercial banks, selects listed companies of Shenzhen Stock Exchange A-share on the main board from2009to2013as the primary sample. It explores the internal audit quality playing a role in improving the performance of the company by multiple regression models from four aspects that are the independence of the internal audit department, the size, the soundness of internal audit system and the establishment motivation. The empirical test has the following conclusions. The independence of the internal audit department and the size are positively correlated to the corporate performance. There is no significant correlation between the internal audit system and the corporate performance, and the same is establishment motivation. The conclusions show that the internal audit system in our country is just a formality, and don’t come into real effect. Internal audit has a positive role on the growth of company value, but the effect is limited. Although listed companies has established the internal audit department early, it don’t play the role fully. Finally this paper puts forward policy recommendations aiming at these issues from the membership level of the internal audit department, size, and internal audit system and governance structure.