Research On The Impact Of Internal Control Weaknesses Disclosure On Inefficiency Investment

Investment management determines whether the firms can grow quickly and steady,but because of the existence of the information asymmetry and the Agent problem,the efficiency of the investment is affected seriously.Many researchers have provided many direct evidences that there are many inefficient investment situation in listed companies.They also found that the higher the quality of internal controls,the better the quality of accounting information,and then the information will be more reliable;What's more,reliable information can reduce the information asymmetry problem to some extent,which can reduce the inefficient investment behavior thoroughly.But if firms disclose weaknesses in internal control.It shows that the company's internal control is imperfect,which will result in inaccurate accounting information.The inaccurate accounting information can lead to the increase of asymmetric information and agency problems,causing inefficient investment behavior.Therefore,we consider from the fundamental problem,discussing the impact of the disclosure of internal control weaknesses on inefficiency investment.In the end,we hope that we can make the correct guidance to external investors,and provide some advices to firms so as to improve the efficiency of investment.In this paper,Combining with the specific situation of China's listed companies in recent years,with the principal-agent theory,asymmetric information theory as the research basis.We select the 2012 to 2014 data of the listed companies as samples from Shanghai and Shenzhen two cities.First,we conduct the Descriptive statistics for the Listed company's overall investment efficiency and the different investment level when the firms in different financial constraints.we found that :(1)the number of firms that under-investment is more than the firms that over-investments from the China's listed companies;(2)It has some impact on the firms' investment level when the firms in different financing constraints condition.Then we use correlation analysis and multiple linear regression to prove the accuracy of descriptive statistics once again.We found that:(1)when the firms disclose internal control weaknesses,the firms are more prone to invest inefficiently.(2)the financing constraints and investment behavior has obvious relevance,they will tend to under-investment when the firms have financing constraints;(3)they will tend to over-investment,when the firms have no financing constraints;Finally,we put forward some suggestions to these research conclusions.