The Impact Research Of Internal Control Quality On Bond Credit Rating

Internal control is an important tool in corporate governance and effective internal control is helpful to ensure the legal operation of enterprises, asset security and can reasonably ensure the authenticity of corporate financial reporting and related information. Under the premise of agency theory, information asymmetry theory and signaling theory, the internal control information disclosure will surely bring more useful decision information to investors, alleviate the degree of information asymmetry in the capital markets. Based on the efficient market theory, the quality of internal control of listed companies can reflect in the capital market in a timely manner, and investors will be based on the quality of its internal control to appropriate the required return on investment due to the lack of information. The disclosure of internal control defects, which indicates that internal control quality is low, will send negative signals to the capital market, and investors will demand higher returns because of the credit risk improved, thus increasing the company’s cost of capital.According to the Ministry of Finance, Audit, the Banking, Securities and Insurance regulatory commission jointly issued "Enterprise Internal Control Basic Norms" and guidance, all main board listed companies in our country should implement enterprises’internal control standard system in 2014, but the effect of the establishment of internal control remains to be verified. Research on the relationship between internal control quality and the bond credit rating can effectively strengthen the construction of the system of internal control and the healthy development of the bond market, at the same time is conductive to bond investors to make rational investment decisions.Based on the bond market, using the internal control audit opinion as substitution variables of internal quality control, and using the data of listed companies from 2014 to 2015 as research samples, this paper analysis the reaction of the bond credit rating after internal control quality. The study finally found that the bond credit rating reacted to the quality of the internal control quality, and present positive correlation. And this positive relationship will be strengthened because of the "big four" and will be reduced because of the nature of state-owned property rights.This paper is divided into six parts, and the first part is an introduction. This part describes the background, significance, a brief content and framework of this paper, as well as the innovation. The second part summarized the relevant researches on internal controls and the credit rating of other scholars, to determine the research direction and method. In part three the author used the agency theory, signaling theory and efficient market hypothesis to the relationship between internal control quality and bond credit rating and proposed the hypothesis of this paper. The fourth part of this article selects the appropriate control variables, and built the regression model in this paper. The fifth section performed descriptive statistical analysis, correlation analysis andregression analysis of the variables in our model to find out the relationship between internal control andbond credit rating, then used robustness test to determine the reliability of the study.The sixth part drew the final conclusions of the study, proposed appropriate policyrecommendations and prospects for future research.