Research On The Impacts Of Internal Control Defects On Commercial Credit Financing

Commercial credit financing can alleviate the financing pressure of the company to a certain extent,and it has the characteristics of low cost and convenience.In the case of principal-agent problem and information asymmetry,how to reduce the information risk has become an important issue in the development of commercial credit financing.Effective internal control can provide reasonable guarantee for the reliability of financial information,the efficiency of business activities and the security of assets,enhance the trust of suppliers,and thus improve the scale of commercial credit financing.However,internal control is a part of the company's internal management.It is difficult for suppliers to directly observe and judge the effectiveness of its operation.Therefore,the information of internal control defects becomes an important basis for suppliers to judge the effectiveness of internal control.Therefore,it is meaningful to directly study the impact of internal control defects on commercial credit financing.Firstly,this paper combs the related literature of internal control deficiencies and commercial credit financing,and on the basis of principal-agent theory,information asymmetry theory and signal transmission theory,analyses the impact of internal control deficiencies on commercial credit financing,and puts forward the hypothesis of this paper.Secondly,in the empirical part,we use OLS to analyze 12139 data of A-share listed companies in Shanghai and Shenzhen from 2012 to 2017.Considering the possibility of self-selection of samples,this paper uses Heckman two-stage model to verify,and draws a conclusion consistent with OLS.The conclusions of this paper are as follows:(1)Compared with companies without defects in internal control,companies with defects in internal control obtain less commercial credit financing.This is because the internal control deficiencies will affect the supplier's trust level,which has a significant negative impact on the company's commercial credit financing.(2)There is a significant negative correlation between the severity of internal control deficiencies and commercial credit financing.The more serious the defects are,the worse the financial information and the lower the efficiency of operation will seriously affect the trust level of suppliers.(3)Compared with the state-owned companies,the defects of internal control lead to a significant reduction in the scale of commercial credit financing of non-state-owned companies.This shows that when the company's internal control is defective,compared with the state-owned companies with government implicit guarantee,suppliers prefer non-state-owned enterprises to repay their loans in time and reduce the risks they face,so the impact of internal control deficiencies on commercial credit financing is more significant in non-state-owned companies.(4)The disclosure level of internal control information can weaken the adverse impact of internal control deficiencies on commercial credit financing,indicating that the more fully the disclosure of internal control information is,the more helpful it is for suppliers to assess the risks faced by companies.At this time,internal control deficiencies may not increase the risks faced by suppliers.(5)Through Heckman two-stage model,it is found that inverse Millsby is significant at 1% level,which indicates that the company has self-selection problems in the disclosure of internal control defects.Last,this paper puts forward some countermeasures and suggestions from the aspects of improving internal control and fully disclosing information of the company and making clear the identification criteria of internal control defects and strengthening supervision as soon as possible.The innovation of this paper is to directly study the impact of internal control deficiencies on commercial credit financing,and to discuss the relationship between internal control and commercial credit financing from a negative perspective.On this basis,this paper also studies the impact of the severity of internal control deficiencies on commercial credit financing,the relationship between internal control deficiencies and commercial credit financing under different property rights,and the impact of the level of internal control information disclosure on the relationship between internal control deficiencies and commercial credit financing.