Analysis of the Relationship between ListedCompanies’ Earnings Quality and Internal Control Information Disclosure*
Jianfei Leng, Lu Li
School ofBusiness, Hohai University, Nanjing, China
1、Introduction
The casesof financial fraud lead to incalculable losses in these years, which arerelated to firm’s weak system ofinternal control. Now, both domestic and foreign have issued a series of legalnorms. For example, Sarbanes- Oxley (SOX) Act force listed Companies todisclose their internal control information, including internal controldeficiencies and internal self-assessment report and external auditor’s audit opinion. We formulate two important files: “Shanghai Stock Exchange listed companies internal control guidelines” and “Shenzhen Stock Exchange listedcompanies internal control guidelines”. These filesrequire companies to disclose internal control self-assessment report andcomments of external auditor’s audit, which greatlyimprove company’s effectiveness of internal control andquality of financial information. Accounting earnings is the score and one ofthe most important elements in all of the accounting information, which mainlyrefers to the company’s ability of forecasting futurenet cash flow. Higher earnings quality is the key to the effective function ofthe market and the insurance of the company’s futurecash flow. The better quality of company’s earningsinclined to disclose more internal control information and to get more outsideinvestment. Therefore, earnings quality is one of the most important factors toaffect internal control information disclosure. In this article, with theanalysis of multiple regressions, we examine the relationship of earningsquality and internal control disclosure of information in the sample of 1273nonfinancial firms in shanghai and Shenzhen Stock Exchange in 2010.
2. PriorResearch on Internal Control Information Disclosure
Listedcompanies’ internal control informationdisclosure is mostly voluntary before 2002, but few companies are willing to doso. Since Sarbanes-Oxley (SOX) Act is enforced, many listed companies areforced to disclose their information of internal control, which providing morematerial and information to scholars who study listed companies’ internal control. Researches on internal control informationdisclosure are mainly concentrated on the following four aspects:
1) The current situation and solutions of internal control informationdisclosure.
There arelots of researches on the current situation of internal control informationdisclosure,Mc. Mullen，Raghunandan and Rama[1] studied 4154 companies during 1989-1993, suggesting that only 26.5%companies are willing to disclose their internal control information, and thatonly 10.5% provide their internal control report among those companies withdeficiencies on their financial reports. It shows that the proportion ofcompanies voluntarily disclosing their internal control information is little,and that the companies with deficient financial report are more unwilling toprovide the internal control self-assessment report. Hermanson [2] also didcorresponding empirical research on listed company’sinternal control information disclosure and got the same conclusion. Minghui Li[3] and Dongmei Qin [4] made related researches on the current situation ofinternal control information disclosure. They believed that current listedcompanies’ enthusiasm of disclosing internal controlinformation is not strong, and much internal control information was notsubstantial but formal. Minghui Li [3] also drawn on the experiences of theUnited States in internal control information disclosure, and provided a seriesof suggestions and measures of improving internal control informationdisclosure. Hua Li, Lina Chen [5], Xiaofeng Dai and Jun Pan [6] analyzed thecurrent situation of internal control information disclosure with internalcontrol theories, and pointed out the problems and put forward thecorresponding solution. Xinhua Dai and Qiang Zhang [7] mainly did the researchon listed banks’ internal control information disclosure,finding that our listed banks’ system of internalcontrol information disclosure is not standardized and sufficient. Theyinterpreted the corresponding requirements of the US internal controlinformation disclosure set by “Sarbanes-Oxley Act”, suggesting China to promote the improvement of listed banks’ internal control information step by step. According to relevantprovisions of internal control information disclosure required by “Shanghai Stock Exchange Guidelines” and “The Notice on Listed Companies’ AnnualReport in 2006”, Youhong Yang and Wei Wang [8] analyzedthe internal control information disclosure of listed companies on ShanghaiStock Exchange in 2006 with descriptive statistics, and found many problems.
2) Impact factors ofinternal control information disclosure.
Bronson, carcello, Raghunandan andDoyle, Ge, McVay suggested that there is a correlation between corporateidentity and internal control information dis-closure. Company size, theproportion of institutional investor holding, the number of audit committee andthe speed of earnings growth have impact on internal control informationdisclosure. Many other experts did empirical study on such question. Ge andMcVay used a survey method to analyze the sample, discovering that thedisclosure of material defects is related to the complexity of the company butthere is no direct correlation with company size and profitability. Jifu Caimade a relevant empirical study of A-share listed companies to find impactfactors of listed companies’ internalcontrol information disclosure. The results showed that the companies with abetter operating performance and higher reliability of financial report aremore inclined to disclose its internal control information, and vice versa.This indicates that the company’s operating performanceand reliability of financial report affect the listed companies’ internal control information disclosure. Adrew J. Lcone selectedlisted companies who disclosed material defects of their internal controlinformation in their annual reports as samples to study the impact factors ofinternal control information disclosure. The results show that the complexityof corporate structures, the changes in company structure and the inputs tointernal control are all the impact factors of internal control informationdisclosure. Shaoqing Song and Yao Zhang studied A-share listed companies onShanghai and Shenzhen Stock Exchange from 2006 to 2007, finding that there is acorrelation between corporate governance characteristics and internal controlinformation disclosure. Audit committee, annual statistics, company size andthe place of listing have a significant impact on internal control informationdisclosure. Bin Wang and Huanhuan Liang [15] studied 1884 listed companies on ShenzhenStock Exchange between 2001 and 2004. They made use of their rating reports ofinformation disclosure quality to examine the inherent relationship betweenlisted companies’ corporate governance characteristics,characteristics of operating condition and information disclosure quality,finding that corporate governance characteristics and characteristics ofoperating condition have a certain impact on internal control informationdisclosure.
3) The cost of internal control informationdisclosure.
The studies on the cost of internal controlinformation disclosure are not very much. J. Efrim, Boritz, Ping Zhang thoughtthat the costs of disclosing internal control information is enormous, and themanagement did not believe that the benefits of internal control informationdisclosure would surpass the corresponding costs. Maria analyzed the samplewhich discloses their internal control information in accordance with SECrequirements, primarily study the relationship between the costs of disclosinginternal control information and the effectiveness of the internal controlsystem. It is found that the cost of disclosing deficiencies of internalcontrol information is far more than that of defect-free.
4) Correlation between internal control andearnings quality.
There aremany researches on the correlation between internal control and earningsquality. Doyle [11] studied the relationship between internal control andearnings quality, and found that internal control is a motivation of earningsquality. The studies of Chan [18] and Goh and Li [19] are similar. Chan [18]discovered that earnings management of those who disclose the material defectsof internal control has a higher degree but the return on investment is verylow. Goh and Li’s [19] also foundthat company’s earnings stability can be increasedafter improving the defects of internal control. Lobo and Zhou [20] made acomparison on companies’ discretionary accruals betweenbefore implementing “Sarbanes-Oxley Act” and after implementing it, finding that companies’ discretionary accruals decreased a lot after the implementation of “Sarbanes-Oxley Act”. Doyle, Ge and Mcvay[10] divided the internal control defects into two aspects: corporate level andaccount level, finding that internal control defects on corporate level isinfluential to earnings quality, but there is no correlation between internalcontrol defects on account level and earnings quality. Guoqing Zhang [21]selected nonfinancial A-share listed companies in 2007 as a research object tostudy the internal control quality on earnings quality. The results have shownthat there is no close link between high quality internal control and earningsquality, but company’s characteristics and corporategovernance factors may affect internal control quality and earnings qualitysystematically. Chunsheng Fang et al. [22]used questionnaire survey to examine the relationship between internal controlsystem and financial reporting quality, finding that financial reportingquality improved after implementation of internal control system. Jun Zhang andJunzhi Wang [23] selected listed companies on Shanghai Stock Exchange in 2007as sample, and used adjusted Jones model to calculate discretionary accrualsand found that discretionary accruals significantly reduced after the review ofinternal control. Shengwen Xie and Wenhai Lai [24] selected A-share listedcompanies on Shanghai Stock Exchange in 2007 and 2008 as samples. They analyzedthe relationship between internal control deficiencies and earnings quality byusing a paired study, and found that listed companies’internal control information disclosure had an effect on earnings quality.
Based on the above studies, we can see thatinternal control gets more attention after the promulgation of “Sarbanes-Oxley Act”. Currentresearches centralize on the defects of existing laws and regulations, thecurrent situations of listed companies’ internalcontrol information disclosure, the relationship between listed companies’ internal control information disclosure and their operatingconditions, financial report quality and earnings quality. Among the currentstudies, most have focused on descriptive statistics and the relationshipbe-tween internal control quality and earnings quality, while there is no studyuse earnings quality as explanatory variable to reflect its effect on internalcontrol information disclosure. Therefore, this article uses earnings qualityas main explanatory variable and disclosure of internal control as thedependent variable to do empirical study, which compensate for the lack ofcurrent research to some extent.
3. Method
3.1. Hypothesis
Hypothesis: the better the quality ofearnings is, the higher the level of internal control information disclosurewill be.
According to agency theory and signalingtheory, corporate trustee has obligation to report relevant information to thecorporate capital owners, which give help to the operation of business. In theprocess of reporting, corresponding information is to pass the corporaterelevant signal to the capital market. The signal can make the operator affectthe flow of resources in capital market in a certain extent to improve theenterprise’s interests. There is the mutually reinforcing relationship betweeninternal control information disclosure and the quality of earnings. A companythat can fully disclose its information of internal control means that itsmanagers have a good description of ethics. Meanwhile, a company that can takethe initiative to show its internal control information in detail indicatesthat its company has a higher self-confidence, which will attract more capitalmarket resources, increase its cash flow, enhance the quality of earnings, andimprove management capabilities. Conversely, companies with good earningsquality will choose to voluntarily disclose their information of internalcontrol in detail. They can distinguish themselves to the companies withinferior earnings quality and get more favor from investors.
上市公司盈余质量与内部控制信息披露关系研究
冷建飞，李璐
（河海大学商学院，南京）
1、前言
近年来金融诈骗案件的发生带来了不可估量的损失，这与公司内部控制系统弱是有关系的。目前，国内外相继颁布了一系列法律规范。例如，《萨班斯-奥克斯利法案》（SOX）要求股票上市公司披露内部控制信息，包括内部控制的缺陷，内部的自我评估报告以及外部审计师的审计意见等。我们国家也制定了两个重要的文件：《上海证券交易所股票上市公司内部控制指导方针》和《深圳证券交易所股票上市公司内部控制指导方针》。这些文件要求公司披露内部控制自我评价报告和外部审计师的审计意见，从而大大提高了公司内部控制与财务信息质量的有效性。会计盈余是一个得分点，也是所有的会计信息中最重要的元素之一，它主要影响公司预测未来净现金流的能力。较高的盈利质量是市场有效运行的关键和公司未来现金流量的保障。公司的盈余质量越好，披露的内部控制信息越多，获得的外部投资也越多。因此，盈余质量是影响内部控制信息披露的一个重要因素。在本文中，我们以2010年上海证券交易所和深圳证券交易所的1273家非金融公司为样本，通过多元回归分析，研究盈余质量与内部控制信息披露的关系。
2、已有的关于内部控制信息披露的研究
在2002年以前，上市公司内部控制信息披露采取自愿性原则，但很少有公司愿意披露。自从《萨班斯-奥克斯利法案》（SOX）实施之后，许多股票上市公司被迫披露内部控制信息，这为研究上市公司内部控制的学者提供了更多的资料和信息。对内部控制信息披露的研究主要集中在以下四个方面：
（1）内部控制信息披露的现状与对策
关于内部控制信息披露现状的研究有很多，如Mc. Mullen，Raghunandan 和 Rama 对1989年至1993年期间的4154家公司进行了研究，研究表明在那些财务报告存在缺陷的公司中，只有26.5%的公司愿意披露内部控制信息，只有10.5%的公司提供内部控制报告。这一结果表明，上市公司自愿披露内部控制信息的比例很少，而且财务报告存在缺陷的公司更不愿意提供内部控制自我评估报告。赫曼森也对上市公司的内部控制信息披露做了相应的实证研究，得到了相同的结论。李明辉和秦冬梅对内部控制信息披露的现状也做了研究。他们认为，目前上市公司披露内部控制信息的积极性不高，且大部分内部控制信息流于形式没有实质性意义。李明辉还借鉴了美国在内部控制信息披露上的经验，为完善我国上市公司内部控制信息披露提供了一系列建议和措施。李华，陈丽娜，戴晓峰和潘军运用内部控制的理论分析了内部控制信息披露的现状，指出了存在的问题并提出了相应的解决方法。戴新华和张强主要对上市银行内部控制信息披露进行了研究，发现我国上市银行内部控制信息披露体系不够规范和充分。他们对《萨班斯-奥克斯利法案》(SOX)中有关美国内部控制信息披露的规定做了解释，建议中国应分步实施上市银行内部控制信息的改进完善。根据《上海股票交易所的指导方针》和《2006年上市公司年报要求须知》中关于内部控制信息披露的有关规定，杨有红和王卫运用描述性统计分析了2006年上海证券交易所上市公司内部控制信息披露的情况，发现了许多问题。
（2）内部控制信息披露的影响因素
布朗森，卡瑟罗，Raghunandan和多伊尔，GE，麦克维认为企业形象与内部控制信息存在一定的相关性。公司规模，机构投资者持股比例，审计委员会的数量和收入增长的速度都会对内部控制信息披露造成影响。许多其他专家对这样的问题也进行了实证研究。Ge和麦克维采用问卷调查法分析样本，发现虚假材料的披露与公司的复杂性有关但与公司规模和盈利能力是没有直接关联的。蔡吉福为了找出上市公司内部控制信息披露的影响因素对A股股票市场上市公司进行了相关的实证研究。结果表明，一个拥有良好经营业绩和财务报告可靠性较高的公司更倾向于披露内部控制信息，反之亦然。这表明，公司的经营业绩和财务报告的可靠性对股票上市公司内部控制信息披露存在一定的影响。安德鲁J·Lcone选择在其年度报告中披露内部控制重大缺陷信息的股票上市公司作为样本，以研究内部控制信息披露的影响因素。结果表明，企业组织结构的复杂性，公司结构的变化和内部控制的输入都是内部控制信息披露的影响因素。宋少卿和张尧对2006年至2007年上海证券交易所和深圳证券交易所A股市场上的上市公司进行研究，发现公司治理特征与内部控制信息披露是有关系的。审计委员会，年度统计数据，公司规模和上市地点对内部控制信息披露都有重大影响。王斌，梁欢欢对2001年至2004年深圳证券交易所的1884家股票上市公司进行了研究。他们利用他们信息披露质量的评级报告来研究股票上市公司的公司治理特征，操作条件特征与信息披露质量特性之间的内在关系，发现公司治理特征和操作条件特征对内部控制信息披露有一定的影响。
（3）内部控制信息披露成本
至今关于内部控制信息披露成本的研究还比较少。J. Efrim，Boritz和张平认为，内部控制信息披露的成本是巨大的，而且管理者不相信内部控制信息披露收益会超过相应的成本。玛丽亚以按照证券交易委员会的要求进行内部控制信息披露的上市公司为样本进行分析，主要是研究内部控制信息披露成本和内部控制系统的有效性之间的关系。研究发现，内部控制信息披露不足产生的成本远高于内部控制信息披露无缺陷产生的成本。
（4）内部控制和盈余质量的相关性
有很多关于内部控制与盈余质量相关性的研究。多伊尔研究了内部控制与盈余质量之间的关系，发现内部控制是盈余质量的一个促进因素。K. C. Chan 和B. W. Goh ，D. Li的研究是相似的。K.C.Chan 发现，披露内部控制重大缺陷的上市公司具有较高的盈余管理水平但投资回报率很低。B. W. Goh ，D. Li的研究也发现改善内部控制缺陷可以增强公司盈余的稳定性。G. J. Lobo 和J. Zhou对公司的操控性利润在《萨班斯-奥克斯利法案》的实施前后进行了对比，发现在《萨班斯-奥克斯利法案》实施以后公司的操控性应计利润下降了很多。多伊尔，GE和麦克维将内部控制缺陷分为两个方面：企业层面和核算层面，发现企业层面的内部控制缺陷对公司盈余质量水平是有影响的，但核算层面的内部控制缺陷与盈余质量并没有相关性。张国清博士选择2007年A股市场非金融上市公司为研究对象对盈余质量与内部控制质量的关系进行了研究。结果表明，盈余质量与高质量内部控制之间没有密切的联系，但是公司的特点和公司治理因素可能会系统性地影响内部控制质量与盈余质量。方春生等人采用问卷调查的方式来研究内部控制制度和财务报告质量之间的关系，发现财务报告质量在内部控制制度实施后有所提高。张军，王郡治选择2007年上海证券交易所的股票上市公司为样本，采用修正后的琼斯模型计算操控性应计利润，发现在内部控制评审后操控性应计利润显著降低。谢盛文和赖文海选取2007年和2008年上海证券交易所A股股票上市公司作为样本。他们采用配对研究的方法分析了内部控制缺陷与盈余质量之间的关系，发现股票上市公司内部控制信息披露会影响盈余质量。
在上述研究的基础上，我们可以看到，内部控制在《萨班斯-奥克斯利法案》颁布后越来越受到研究者的关注。目前的研究主要集中在现有法律法规的缺陷，上市公司内部控制信息披露的现状以及上市公司内部控制信息披露与公司的操作条件，财务报告质量和盈余质量的关系上。在目前的研究中，尽管大部分都集中在统计性描述和内部控制质量与盈余质量之间关系的研究上，但并没有以盈余质量作为解释变量来反映其对内部控制信息披露的影响的研究。因此，本文以盈余质量为主要解释变量，以内部控制信息披露为因变量进行实证研究，从而在一定程度上弥补目前研究的不足。
3.方法
（1）假设
假设：盈余质量越好，内部控制信息披露水平越高。
根据委托代理理论和信号传递理论，公司董事对报告公司资本所有者有关信息负有义务，这对公司经营有所帮助。在报道的过程中，相应的信息是通过企业相关的信号到达资本市场的。信号可以使操作人员在一定程度上影响资本市场的资源流动，从而增加企业的利益。内部控制信息披露与盈余质量之间是相辅相成的关系。一个公司可以充分披露其内部控制信息意味着管理者拥有良好的职业道德。同时，一个公司能主动具体地披露其内部控制信息表明公司具有较强的自信心，这将吸引更多的资本市场资源，增加现金流，提高盈余质量和管理能力。反过来说就是，具有良好的盈利质量的公司将选择自愿披露内部控制信息的细节。他们能够将自己与盈余质量低劣的企业区分开来，获得投资者更多的青睐。
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