The Impact Of The Quality Of Internal Control On The Debt Cost Of Capital:the Empirical Research

With the continuous development and reformation of China's capital market, debt financing has become the main financing channels. However, with many of the financial fraud scandals of listed companies come out, major operational errors are common occurence, bank loans and bond defaults are also happened frequently. Making investors suffered huge losses and influencing the investors' confidence for the markets seriously. The internal control as an important control mechanism, it takes natural advantages in terms of investor protection. The level of internal control represents the enterprises' guarantee of the reliability of accounting information and the efficiency of operating. And as debt investors, whether the banking systems and bond investors can identify the quality of internal control effectively, and make a reasonable capital pricing is the main problem in this study.On the basis of combing a lot of related research, the study based on the related theory to discuss deeply on the influence mechanism and function path of internal quality control to the debt capital, and puts forward three main hypothesis and establish the corresponding regression model, and take A share listed companies from 2009 to 2013 as samples, using DIB China's listed company internal control index as indicators of the quality of internal control, then take the empirical test to research hypothesis.The Study found that:(1) the high quality of internal contr ol will significantly reduce the bank borrowing costs and debt financing cost;(2) the nature of property rights will weaken the internal control quality impact on the cost of debt capital.(3) further, because the difference of debt contract, the enterprise will choose different financing ways according to internal quality control. According to the above conclusions, this paper propose some corresponding policies and Suggestions, analyzes the limitation of the study, and discussed the future research directi on.This paper has a guiding significance for deepening the study of the theory of the internal control and the cost of capital, understand ing the internal control's effect on the allocation of resources and capital pricing in capital market, and guiding enterprises financing effectively.