Study On The Influence Of Internal Control Quality On Credit Financing Ability Of A Listed Company

Debt financing is one of the most ways of financing for listed company in China,and bank loan is the main debt financing way.In the credit market,the information asymmetry between banks and enterprises will seriously affect the efficiency of capital allocation in the credit market.The construction of the internal control system and information disclosure of the listed companies,as an important corporate governance mechanism,can effectively alleviate the information asymmetry between banks and enterprises.Based on China's bank credit market,with the internal control quality of enterprises measured by the internal control index,and the credit financing ability of listed companies measured by the two specific indicators of the cost of bank borrowing and the ratio of credit loan,this paper makes a depth survey of the influence of internal control quality on credit financing ability of listed company,and explores whether the high internal control quality of enterprises can actually gain more trust from banks.The paper combines normative analysis and empirical analysis.First of all,the paper expounds the research background,and illustrates the significance of research in combination with the economic and institutional environment,and reviews the relevant literatures.Secondly,it analyzes the influence of internal control quality on credit financing ability of listed company,using theories of information asymmetry,principal-agent and signal transmission,which shows that the higher the quality of internal control,the better the credit financing ability of the listed companies.Finally,the paper makes A-share(excluding the GEM)listed companies as samples of research in Shenzhen and Shanghai stock exchange in2011-2016,using the method of empirical research,and study the positive effect of internal control quality of the listed companies on the improvement of their credit financing ability.The result shows that the high quality internal control can convey positive signal to banks,so that enterprises can get lower bank borrowing costs,and get credit loan on loan contracts easily.Through the above conclusions,the listed companies can pass the physical truth and development strength to the outside by improving internal control quality,reducing the debt risk of creditors,and then improving the credit financing efficiency of the listed companies.This research is helpful to encourage initiative to strengthen the construction of internalcontrol quality of listed companies,and to get lower cost capital and more credit loans by improving their internal control quality.It is helpful for the fund providers to make credit decision and risk assessment with the help of the fund users' internal control information,reducing the cost of their own access to information,alleviating the credit risks,improving resource allocation efficiency.It is also helpful for the Ministry of Finance and other regulatory agencies to formulate,promote and gradually improve internal control regulatory policies scientifically and rationally,and earnestly maintain the effective operation order of credit market.