Study On The Impact Of Disclosure Of Internal Control Defects On The Cost Of Equity Capital In Listed Companies

With the "basic norms of corporate internal control" and "corporate internal control supporting guidelines" have been promulgated,China's internal control system is basically completed.However,there are still many uncertainties in the capital market,and the information asymmetry between investors and enterprises is still grim.Whether the corporate managers or investors,or regulators are concerned about increasing the amount of information available on the market to ease the phenomenon of information asymmetry through the improvement of internal control level and regulating the disclosure of internal control deficiencies so that the information risk investors confront is reduced,thereby reducing the cost of equity capital,which is the problem to be studied in this article.This paper first combs the literatures at home and abroad,and then expounds the relevant theories,and analyzes the process of internal control defects to affect the capital cost of the company's equity by using the theories.On the basis of the theoretical analysis,the author draws the hypotheses.With the 2353 companies that report the internal control evaluation report of Shanghai and Shenzhen A shares Main Board from 2013 to 2015 as study sample and using the multiple linear regression method,the author draws the following conclusions: Disclosure of internal control deficiencies positively affect the cost of equity capital;In the five elements of internal control,the disclosure of internal environment,risk assessment,information and communication elements defects leads to the increase in equity capital costs,and the disclosure of control activities and internal supervision elements has no significant effect on capital costs;Whether the rectification of internal control deficiencies has no significant impact on the cost of equity capital.Finally,the conclusion of this paper is summarized,and the suggestions are put forward from three aspects: enterprise,investor and supervisory department,and the shortcomings and prospects of this paper are pointed out.