Empirical Study On The Impact Of Internal Control Quality On The Annual Earnings Forecast Of Listed Companies

With the development of the Chinese securities market,the market participants’ demand of information is increasing gradually.The disclosure of accrued accounting information cannot meet the needs of the information users,which drive the appearance of earnings forecast.According to the situation of the annual report season in 2018,listed companies gradually began to revise performance forecasts,and the facechanging behavior of profit-to-loss performance forecasts began to appear.The appearance of performance face-changing reflects the quality of listed companies’ performance forecasts.The disclosure of earnings forecast that has high quality can effectively alleviate the problem of information asymmetry,and allow full play to transmit signals to market.Faced with the situation that the quality of performance forecast is worrying,can internal control improve the quality of performance forecast? Internal control,as an indispensable restraint and control mechanism,can effectively ensure the enterprise achieves the established management objectives and ensure the timely generation of accounting information.Internal control can also accurate disclosure of information,to a certain extent which solve the principal-agent problem.The existence of internal control is helpful for the owners to supervise the managers,which can prevent and supervise the self-interest behavior of managers in the course of operation.Enterprises with high quality internal control mechanism represent the high quality of accounting information.Existing scholars’ literature studies show that the quality of internal control can effectively improve the accrual accounting information of enterprises,so what’s the impact on the quality of performance forecast information? In view of China’s unique economic system,state-owned enterprises,as the pillar of social and economic development with Chinese characteristics,have unique competitive advantages over non-state-owned enterprises in the securities market.Does the impact of internal control quality on the quality of performance forecast information differ due to the different ownership nature of listed companies? Most current scholars study the impact of board characteristics,executives background,analyst forecast on earnings forecasts information,and also analyze the motivation of managers to issue the earnings forecasts.Few scholars have in-depth research on the quality of earning forecasts information from the point of the internal control quality.Since the behavior of performance forecast mainly occurs in A-share listed companies in China,this paper chooses the annual performance forecast of A-share listed companies as a sample to study the impact of internal control quality on the information quality of annual performance forecast.The paper chooses the data of A-share listed companies from 2010 to 2017 as a sample,and gets 7147 samples to study the effect of internal control quality on performance forecast deviation,and 6899 samples to study the impact of internal control quality on performance forecast timeliness.This paper is mainly divided into four parts,the first part is the introduction.This part mainly introduces the current disclosure situation of performance forecast and the importance of performance forecast,and elaborates the related concepts of internal control and performance forecast.On this basis,through the collection of domestic and foreign literature on internal control,performance forecast and the correlation between them,this paper reviews the research achievements of these literature,and points out the focus of existing literature research.The second part is about the related theories of internal control and performance forecast.Based on information asymmetry theory,information transmission theory,efficient market theory and principal-agent theory,this part elaborates the relationship between internal control quality and information quality of performance forecast,deduces and puts forward the relationship between internal control quality and information quality of performance forecast on the basis of theory,and takes into account the internal control machine of state-owned and non-state-owned enterprises,then put forward the research hypothesis of whether there are differences between state-owned and non-state-owned.The third part is the empirical analysis of the impact of internal control quality and performance forecast information quality.This part uses Stata 14.0 to analyze the sample data.The data analysis includes descriptive statistical tables,correlation statistical analysis,multiple linear regression analysis and robustness analysis.The fourth part is the conclusion and policy recommendations.The paper draws the following conclusions through empirical tests:(1)The quality of internal control has a positive relation with the earnings forecast information quality.(2)The quality of internal control can reduce deviation of the earning forecast.(3)The quality of the internal control can ensure the timeliness of the disclosure of the earnings forecasts.(4)There are significant differences between state-owned enterprises and non-state-owned enterprises about the influences of internal control quality on the performance forecast information.