The Effect of Information Disclosure of Internal Control Reports on the Stock Market-An Empirical Analysis Based on Event Study Method

Between February and April 2012, all the companies which both listed at home and abroad disclose their internal control reports and internal audit reports to the society for the first time, according to the internal control supporting guidance of the enterprises. The content and influence of the internal control evaluation reports become the attention focus for academic circles, enterprise and government. By using empirical analysis based on event study method, we prove that the condition of information leakage of the annual reports and internal control reports is very serious. In addition, there is much abnormal return existed near the time when the reports disclose. At the same time, by using Paired Samples T Test, we find that the fluctuation of the stock price is mainly caused by the disclosure of annual reports. The influence of internal control reports is rather small. To sum up, the internal control reports are more likely to be the supplementary information for the annual reports. Information disclosure of internal control reports is insufficient and vague. Moreover, the standards of the internal control reports need to be refined and the internal control construction of the enterprise remains to be developed.