Internal Control Defects,Repair And Debt Financing Costs

At the beginning of this century,with the financial scandals of large listed companies such as US energy giant Enron,communications giant Global Crossing,etc.being publicized,the problems hidden deep inside the company are gradually thrown out of the water.The market is highly concerned about the internal management of the company.Negative news is always easier to reflect the current state of corporate management,attracting the attention of the public and causing the attention of the regulatory authorities.Therefore,governments and relevant regulatory authorities have begun to strictly restrict the internal control of the company.After the introduction of the Sarbanes-Oxley Act in 2002,China also promulgated the “Basic Standards for Internal Control of Enterprises” and the “Guidelines for Enterprise Internal Control Support”,which stipulates that all listed companies on the Shanghai and Shenzhen A-share main boards will be implemented from January 1,2012.In addition,China's administrative institutions have implemented the "Regulations on Internal Control of Administrative Institutions(Trial)" since January 1,2014.With the background of bills,norms and guidelines,it provides an opportunity for academic research and theoretical analysis.For micro-enterprise individuals,whether research can alleviate credit financing constraints by repairing internal control defects has important practical significance.This paper will explore the relationship between internal control deficiencies,internal control defect repair and debt financing costs,and according to the market environment as a scale to divide the group of listed companies,and further explore the above relationship.This paper draws the following conclusions:(1)The existence of internal control defects in the current period of listed companies will lead to a significant increase in the cost of debt financing in the next period;(2)When the listed company repairs the internal control defects of the previous period,it will reduce the cost of debt financing in the next period;(3)Compared with companies in developed regions with market environments,the current internal control deficiencies of companies in the underdeveloped areas of the market will more obviously raise the debt financing costs of the next period,and the repair of the previous period's internal control deficiencies will significantly reduce the debt financing costs of the next period.The innovations of this paper include the following aspects:(1)Innovation in research perspectives.This paper further answers whether internal control deficiencies can significantly affect corporate debt financing costs,and whether the marketenvironment of the external environment has the necessary complementary effect.Extend the research perspective to the differences in the market environment and enrich the theoretical research in this field;(2)Innovation in research methods.The new definition method is used to identify the internal control defect repair,so as to explore the impact of the company's repair behavior on the lending period debt financing cost.In addition,in the robust test of this paper,the new calculation is used to define the debt financing cost;(3)Innovation in research content.This paper mainly considers the role of internal control defects and repairs in debt financing costs,and further explores the role of market-oriented environment and the role of social capital,which reflects the different thinking modes of the article and provides empirical evidence and practical significance for the company's operation and governance.