The Association between Internal Control Efficiency and Investment Effectiveness-- Evidence from China Listed Firms

• Main Authors: Hsu, Wan Chi, 許琬琪
• Other Authors: 林宛瑩
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/qv3rzr

碩士 === 國立政治大學 === 會計研究所 === 103 === Based on the sample of A-share listed companies in China over the period of 2007-2011, the research classified the companies by under investment and over investment, and investigated the impact of internal control efficiency on firm investment effectiveness separately The study comprehensively collects internal control reports released by listed firms and collects penalties which are released by the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE). A further classification of internal control weaknesses was performed based on the nature of the events, COSO Internal Control — Integrated Framework and regulations of internal control in China. 　　In sum, the empirical results indicate that, for the companies under investment, the internal control weaknesses of financial reporting have significant positive impact on firm investment effectiveness. On the other hand for the companies which were over investment, those with internal control weaknesses have significant negative association with investment effectiveness. Moreover, the results show that companies with defective of logistics work or the design and execution of internal control were worse performers on investment effectiveness. Based on the COSO framework, the internal control weaknesses classified by the elements, including control environment, risk assessment, control activities, information and communication, monitoring, and the efficient and effective operations of the internal control objective are significant or one-tailed significant negative correlated to firm investment effectiveness. Collectively, if the internal control weaknesses were disclosed by the authorities, the firms had worse internal control efficiency, while the firms which were more conscious of internal control would disclose the internal control weaknesses themselves. The study shows that internal control weaknesses have impact on firm investment policy, and that internal control efficiency helps promote firm investment effectiveness.