Research On The Market Reactions And Informativeness Of Earnings Caused By The Disclosure And Correction Of Internal Control Weakness

Along with the change of the internal control information disclosure policy,domestic and foreign scholars gradually change the focus from the disclosure of internal control information to more specific and key question the disclosure of internal control weakness.From the view of the domestic research status,most previous studies about the market reaction and information content to the disclosure of internal control weakness is under the background of voluntary disclosure,samples of the company and research data are mostly before 2012,and the classification of the internal control weakness are not enough detailed and in-depth.So under the background of mandatory disclosure study the market reaction and informativeness of earnings of disclosure and correction of internal control weakness have a certain significance.At the same time can also help improve the decision-making efficiency of related relevant regulatory agencies.The paper uses the theoretical analysis methods and empirical research methods.First comprehensive elaborated the related literature research achievements at home and abroad,from the perspectives of the disclosure of different form internal control weakness,the correction of internal control weakness,and the correction of different form internal control weakness,empirically tests the impact on market reaction and Informativeness of Earnings.In the case study,paper uses the data from the main band listed companies in Shanghai and Shenzhen Stock Exchanges that disclose internal control weakness mandatorily from 2013 to 2016,and uses Cumulative Abnormal Return(CAR)to reflect the change of stock price before and after a couple of days of information disclosure,in order to verify the corresponding changes in the stock market.In the empirical test paper do descriptive statistics and correlation analysis to the variables in the model,then do multiple regression analysis according to different assumptions,at last select other window period and change the measure of informativeness of earnings to do robustness inspection,to ensure different results of CAR in different window period and different measurement methods of informativeness of earnings don't have material impact on research conclusion.The results show that:(1)Comparing with other form internal control weakness,the internal control weakness about financial reporting can lead to a more significant negative market reaction,and reduce informativeness of earnings.(2)Considering the influence of inter-temporal internal control weakness,the correction of internal control weakness has a positive effect,can lead to a positive market reaction.(3)In addition,correct the internal control weakness about financial reporting can lead to a more significant positive market reaction,and improve informativeness of earnings.Results show that at present the disclosure of internal control weakness in our country can present a certain value,and it affects the decision-making behavior of investors.Therefore,enterprises should strengthen the management and implementation of internal control,relevant regulators should also continue to supervise and guide,investors pay attention to internal control information while also exerting certain pressure on the company.