Research On The Impact Of Corporate Governance On The Quality Of Internal Control Information Disclosure

In recent years, the frequent occurrence of financial fraud cases makes the internalcontrol more and more significant. Information users and scholars pay more attention to issuesrelated to internal control information disclosure. Internal control information disclosure ofChina has entered the compulsory stage, an enterprise should transmit the internal controlinformation to external by disclosing its internal control self-assessment report, internalcontrol audit report should be issued by the CPA after the completion of the internal controlaudit. In2012,"Basic norms for Enterprise Internal Control" and its supporting guidelines hasbegun to implement in main board stock market in Shanghai and Shenzhen. From theinformation enterprises transmitted, we can find that the quality of internal control informationdisclosure is still low, disclosures still have many problems to be resolved. Corporategovernance is the basis for establishment and operation of enterprises, it can also helpcoordinate the relationship between shareholders and business interests, so it influencesinternal control information disclosure to some extent. Corporate governance is closely relatedto internal control information disclosure, better corporate governance can be contributed tothe improvement of the quality of internal control information disclosure.In this paper, firstly we explain the concepts and basic theories about corporategovernance and internal control information disclosure. Based on this, analyze the relationshipbetween corporate governance and internal control information disclosure. Secondly, conducta statistical analysis on disclosure date of internal control self-assessment report, disclosure ofinternal control elements and defects, whether or not to disclose internal control audit report.Analyzing the problems in internal control self-assessment reports, we propose reasonablesolutions. Thirdly, taking the timeliness, completeness and reliability into account, weestablish evaluation system of internal control information disclosure quality and use theentropy weighting method to calculate index weights in order to quantify the disclosure quality.Finally, we use the data and information of Shenzhen main board A shares in2013whichincludes439listed companies to do empirical analysis. The data and information are frominternal control self-assessment reports, annual financial reports and internal control auditreports. Considering internal and external corporate governance factors, we select explanatory variables from shareholding structure, board structure, the size of the supervisory board andother governance mechanisms. The results of descriptive statistical analysis revealed theoverall situation of corporate governance structure and internal control information disclosure.For further analysis, we use correlation and multiple linear regression analysis to study therelationship between the two. The results show that in view of corporate governance,major factors affecting quality of internal control information disclosure are the nature ofcontrolling shareholder, the proportion of public shareholding, ownership concentration,equity restriction and size of the supervisory board.Based on the above analysis, we propose to encourage the development of institutionalinvestors, enterprise which has a high equity restriction should appropriately reduce its equityrestriction to ensure a reasonable balance of the shareholding structure, give full play to therole of the supervisory board and independent directors in order to enhance the capacityconstraints of major shareholders, furthermore, improve the internal control regulations andpolicies to increase the operability of the self-evaluation. Promote the quality of internalcontrol information disclosure while improving corporate governance, which can provide thebasis for information users to make decisions.