External regulation and the quality of internal control: An empirical analysis of China's A-share markets

摘要

I examine whether external regulation has an impact on the quality of internal control of listed corporations. Both formal and informal mechanisms are used to measure external regulation. Formal mechanism includes legal system and government intervention. Informal mechanism includes media attention. The quality of internal control is measured by DIB internal control index of the listed corporations in China. The results indicate that formal external regulation significantly affects the quality of internal. But the role of the informal mechanism is not enough.