Internal Control Quality and Financial Distress Recovery——Based on the ST Companies of A Shares on the Shanghai and Shenzhen Stock Markets during 2007~2011
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Internal Control Quality and Financial Distress Recovery——Based on the ST Companies of A Shares on the Shanghai and Shenzhen Stock Markets during 2007~2011
HE Li-fen1, ZHU Xue-yi1, WANG Chuan-bin2
1.Management School, China University of Mining and Technology, Xuzhou 221116, China; 2.School of Economy Management and Humanities, Jiangsu Institute of Architecture and Technology, Xuzhou 221008, China
Abstract Citing the ST companies of A shares on the Shanghai and Shenzhen Stock Markets during the years of 2007~2011 as samples, this article makes an empirical analysis of the relationships between internal control quality and financial distress recovery by the application of logistic regression model. The indication of the research is that the overall level of internal control quality plays a significantly active role in the financial distress recovery of ST companies. Among all the elements of internal control, control environment, risk appraisal, and internal monitoring are comparatively more helpful in the recovery of the financial distress. For companies which have shaken off the title of “ST”, the level of their internal control quality functions reversely in determining whether they will be dubbed the name of “ST” again, and such companies with low internal control quality are most likely to get into financial troubles for the second time. This article proposes strategies concerning strengthening of the internal control and perfection of the internal control assessment system so as to help the ST companies to quickly flee from the financial distress.
HE Li-Fen,SHU Hua-Xi,WANG Chuan-Ban. Internal Control Quality and Financial Distress Recovery——Based on the ST Companies of A Shares on the Shanghai and Shenzhen Stock Markets during 2007~2011. Economic Survey, 2014, 31(1): 0118.
2014, Vol. 31 
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