The Effect Of Internal Control Quality On Corporate Debt Financing Cost And Scale

As of 2016,the total number of Listed Companies in China reached 3479,the stock market value is more than $53 trillion.However,in recent years,the number of problem of internal control of listed companies is getting large.Only in 2016,due to internal control violations by the China Securities Regulatory Commission to deal with the punishment of up to 169 cases.Among them,Dandong Xintai electric Limited by Share Ltd(Stock Code:300372)is due to financial fraud was found fraudulent issuance,or will become the first single gem delisting due to fraud.The main objectives of internal control is to ensure the reliability of corporate financial reports,through the internal control system can be from all aspects of the financial report to ensure the protection of financial reports,the true reliability.As a result,internal control is increasingly valued by governments.Since 2006,China has gradually promulgated a series of regulations and implementation rules for the internal control of enterprises.These norms and guidelines have strengthened the internal control construction of our enterprises from the institutional level,and the internal control construction of our enterprises has been standardized to a certain extent,China's internal control system has gradually established.China's capital market is still immature,the level of debt financing is low,the financing cost is high,and the financing system has been improved.However,the financing system of our country has been improved,Enterprises face a greater degree of debt financing difficulties,capital market development is still an unbalanced reality.Through the summary of domestic and foreign research,the root cause of the problem of debt financing is information asymmetry and principal-agent problem,and by strengthening the internal control construction can alleviate the information asymmetry and agency agent conflict,improve the quality of internal control debt financing costs and scale will Have a positive impact.Therefore,the study of internal control on debt financing costs and the size of the impact of a certain significance.This paper first introduces the research background and significance,research content and methods,as well as possible innovations and deficiencies,and summarizes relevant literature and research at home and abroad.Secondly,it defines the basic concepts and explains the relevant theoretical basis,laying the theoretical foundation for the further study of this paper,and put forward the four hypotheses of this paper.And then determine the study samples,data sources and screening criteria,variable definitions and model building.After the analysis of the main variables,the analysis of the correlation,the control of the degree of market,company size,growth,total return on assets,asset-liability ratio,tangible asset ratio,commercial credit financing and other factors,with empirical test internal control The impact of quality on the cost and scale of debt financing,and the difference between the quality of internal control and the cost and scale of debt financing is studied based on the nature of different property rights.The research found that:First,the improvement of internal control quality,can effectively expand the scale of corporate debt financing;Second,by improving the quality of internal control,effectively reducing the cost of corporate debt financing.By contrast,it is found that the quality of internal control in private enterprises is more significant than that of state-owned enterprises on the cost and scale of debt financing.Finally,based on the results of empirical research,the following conclusions and suggestions are drawn:enterprises should pay attention to the improvement of internal control quality;regulators should establish a unified internal control measures as soon as possible;the government should reduce the intervention and rationally divide the government and market boundaries.