Abstract
Internal control information disclosure is a key factor to investors’ decisions, and is closely connected with corporate governance. It also has a direct impact on agency cost and earnings management. This article verifies the relationship between internal control information disclosure, agency cost and earnings management with the Shenzhen A-share listed companies from 2011 to 2013 as samples, and we build the internal control information disclosure index (ICIDI) to evaluate the quality of internal control information disclosure based on the Standard for Enterprise Internal Control. By analyzing, we found that internal control information disclosure can affect earnings management through agency cost, and the improvement of internal control information disclosure will effectively reduce agency cost, thus reducing earnings management.
Highlights
Information disclosure of internal control is an important channel for investors to obtain accounting information of listed companies
Internal control information disclosure quality of listed companies determines whether companies are worth to invest or not, and the quality of accounting information disclosure directly affects the efficiency of the capital market asymmetry and resource allocation
In model 3, MFR is negative to internal control information disclosure index (ICIDI), which means the improvement of internal control information disclosure brings the decline of agency costs
Summary
Information disclosure of internal control is an important channel for investors to obtain accounting information of listed companies. (2016) Internal Control Information Disclosure Quality, Agency Cost and Earnings Management—Based on the Empirical Data from 2011 to 2013. In the above context, it is necessary to measure the listed company’s internal control information disclosure and examine relevant economic consequences. In China, there’s few empirical evidence to verify whether the improvement of internal control information disclosure reduces the earnings management by reducing the agency cost. Based on the Basic Norms of Internal Control implemented in 2010, this article is based on the Shenzhen A-share listed companies to explore how internal control information disclosure can improve the earnings management, using agency cost as intermediate variables
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