The Relationship Between Internal Control Information Disclosure Quality, Agency Cost And Earnings Management

Internal control information disclosure is a key factor to investors' decisions, and is closely connected with corporate governance. The agency costs and earnings management is always an important research subject of corporate finance. Recent years, our country has issued Standard for Enterprise Internal Control, which illustrates the importance of internal control information to the market. In this context, the impact of internal control information disclosure and whether the disclosure quality will affect earnings management have important practical significance.This article selects 1816 samples which consists of 454 companies from 2011 to 2014 listed in Shenzhen A-share, and build internal control information disclosure index(ICIDI) based on Standard for Enterprise Internal Control, which aims to find the relationship among the internal control information disclosure, agency costs and earnings management. When it comes to empirical analysis, this article will make regression about internal control information disclosure and earnings management, which analysis the impact of internal control information disclosure. Then make regression about agency costs and earnings management, which help calculate the agency costs that affected by the internal control information disclosure through the coefficient estimates. Finally, this article makes regression about the fitting value of agency costs and earnings management, which can verify whether the internal control information disclosure influences earnings management by influencing agency costs.This article makes the conclusion that Standard for Enterprise Internal Control does make effect, listed companies, investors and policy makers should pay more attention to the internal control and elaborate the standard. In terms of empirical conclusions, the higher internal control information disclosure quality has significant inhibitory effect on earnings management. And the internal control information disclosure affect earnings management through agency cost, which means promoting the quality of internal control information disclosure can reduce agency cost, thus reducing earnings management.