The Research In The Effect Of Information Disclosure Of Internal Control On Bank’s Loan Contract

Debt ifnancing is an important financing channel of ente’rpirses, and the banks loansplay the most impo’rtant role in the listed companies debt ifnancing. However, due to thepresence of agency costs, the listed companies face the financing constraint. In fact, thecommercial banks have paid great attention to the financial data of debtors, specifically theprivate enterpirse’s. As an emerging internal auxiliary governance mechanisms, internalcontrol can provide protection to make sure the financial information of companies is real andeffective. With the publication of the basic standard and implementation guidelines of internalcontrol, and the requirements of full implementation of internal control and internal controlself-assessment report released for listed companies in2012，the internal control seems tohave become the focus in academe and practice. All along the time, the Chinese governmentmaintains strong supervision and intervention on banking. To the pace of reforms speedingup and the market continues to advance, the industry operating of commercial banks will alsogradually become clear and open, to act in accordance with the laws of the market. Whetherinternal control can or can’t promote mutually beneficial cooperation between enterpirses andbanks, commercial banks and listed companies must face the real problem and, which is alsothe main topic of this paper.This paper takes461listed companies, which mainly run the real estate management anddevelopment during2008一2012as the research object to find out the real relationshipbetween information disclosure of internal control and bank’s loan contract. Based on theexisting relevant research results at home and abroad, the paper uses empirical research andnormative research combining method, to analyse internal control’s impact on three aspects ofthe bank’s loan contract which includes ifve elements.lt also analyse the relationship underdifferent ownership, as a new exploration.According to empirical studies，this paper ifnds that the internal control of enterprises iscapable to play a positiv’e role in signing banks loan contracts. When the level of informationdisclosure of internal control is higher，the companies can get more bank loans required，lower cost of debt financing, longer term of the loan. Taking into account the existence of theSBC and political context, these concl’usions cant be proved evidently in the state samples，except the term of debt ones. Based on these conclusions, the paper suggested that in order to ease the debt financingconstraints, listed companies should improve all aspects of internal control further; relevantlegislative departments should take more provisions on internal control to strengtheninformation disclosure, and develop appropriate punitive measures of listed companies withinternal control deficiencies; regulatory authorities should increase market-oriented reform ofthe state-owned listed companies and state-owned commercial banks to ensure thatnon-state-owned enterprises could share the same credit treatment, let the debt covenantsoperated safe and efficient with the market rules to allow.