The Effect of Internal Control Technology on the Information Transparency

Improving information transparency will help improve corporate governance and protect the interests of investors, alleviate information asymmetry between owners and operators, reduce transaction costs, thereby improve the efficiency of capital market operations, and promote effective allocation of resources. This paper uses the 2009–2019 data of Shanghai and Shenzhen A-share listed companies with internal control deficiencies, uses the Future Earnings Response Coefficient (FERC) to measure company information transparency, and studies the impact of internal control deficiencies on company information transparency, as well as this under different ownership properties. The study found that as the degree of internal control defects increased, FERC was weakened, indicating that internal control defects will reduce the transparency of company information, and this effect mainly exists in state-owned enterprises, and the performance is not obvious in non-state-owned enterprises. The above conclusion is still valid after controlling endogeneity. The analysis of the function path found that the increase in the degree of internal control defects will increase the degree of accrued earnings management, and reduce the disclosure tendency, frequency, precision and accuracy of management's voluntary performance forecasts, indicating that internal control defects will cause management to provide investors with Lower-quality accounting earnings or voluntary disclosure of less or less reliable private information, thereby reducing the company's information transparency. This article expands the research on the influencing factors of internal control deficiencies. At the same time, the research conclusions have important reference value for improving the company's information transparency.