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An Empirical Analysis about the usefulness of Internal Control Information on Corporate Soundness Assessment

기업건전성평가에 미치는 내부통제정보의 유용성에 관한 실증분석 연구

  • Yoo, Kil-Hyun (Dept. of Business & Administration Graduate School of Dongguk University(Seoul)) ;
  • Kim, Dae-Lyong (Dept. of Business & Administration, Dongguk University(Seoul))
  • 유길현 (동국대학교_서울 대학원 경영학과) ;
  • 김대룡 (동국대학교_서울 경영학과)
  • Received : 2016.06.08
  • Accepted : 2016.08.20
  • Published : 2016.08.28

Abstract

The purpose of this study is to provide an efficient internal control system formation incentives for company and to confirm empirically usefulness of the internal accounting control system for financial institutions by analyzing whether the internal control vulnerabilities of companies related significantly to the classification and assessment of soundness of financial institutions. Empirical analysis covered KOSPI, KOSDAQ listed companies and unlisted companies with more than 100 billion won of assets which have trading performance with "K" financial institution from 2008 until 2013. Whereas non-internal control vulnerability reporting companies by the internal control of financial reporting received average credit rating of BBB on average, reporting companies received CCC rating. And statistically significantly, non-reporting companies are classified as "normal" and reporting companies are classified as "precautionary loan" when it comes to asset quality classification rating. Therefore, reported information of internal control vulnerability reduced the credibility of the financial data, which causes low credit ratings for companies and suggests financial institutions save additional allowance for asset insolvency prevention and require high interest rates. It is a major contribution of this study that vulnerability reporting of internal control in accordance with the internal control of financial reporting can be used as information significant for the evaluation of financial institutions on corporate soundness.

Keywords

Internal Control;Internal Control over Financial Reporting;Corporate Credit Rating;Asset Quality Classification;Vulnerable Companies

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