Abstract：The present study investigated the effect of Management Salary on the Internal Control Information on Disclosure.An empirical approach was adopted，which used the sample of 13，971 Chinese public firm-years from 2008 to 2016 to examine how management salary impact on the internal control information on disclosure.The survey revealed that there was a significant positive correlation between the management compensation and the quality of the internal control information on disclosure.This finding seems to support the viewpoint that an appropriate management monetary compensation has a positive effect on the improvement of the quality of internal control information disclosure.

Key words：management salary；internal control；information on disclosure

I Introduction

In the capital market，information is one of the most important links between enterprises and investors，and also an important basis for investors to choose valuable investment objects.Now，the information released by listed companies around the world can be roughly divided into two categories：one is financial information，including the company’s financial situation，operating results and cash flow.The other category is non-financial information including internal control and other corporate governance information.

In the existing research on information quality financial information as the research object takes a large proportion .By contrast，the internal control information has not received enough attention from the academic community.Actually internal control information and financial information both influence the formulation of investment strategies when investors choose investment companies.

Therefore，the author intends to study the relationship between executive compensation and the quality of internal control information disclosure.

II Literature Review

Prior to the Sarbanes-Oxley Act，internal information was not mandatory，but many companies still voluntarily disclosed it.It is because internal control information is a signal of high quality of a company’s internal control and through it this signal could be transmitted to external users.It can also distinguish itself from those companies with low quality of internal control （Bronson，Joesph and Carcello，2006）.

Hong feng，Dai Wentao and zhang Ran，2014）.From the above，it seems that the economic characteristics and internal governance of the company are two of the factors influencing the disclosure of internal control information （Che Xiangwu and Peng zhengyin，2016）.

There exists a substantial relationship between management salary internal control defects （Hammersley，etc.，2007）.Management salary also have positive effect on internal control disclosure of information because the internal control not only standard the management decision-making behavior but also improve the corporate performance.The higher the quality of internal control is，the higher the sensitivity of the management’s compensation and performance will be.It is believed that the implementation of internal control restraints the self-interested behavior of managers，thus helping to improve the company’s performance （Theresa f.and Herura et al.，2011）.Lu Rui，liu Jianhua，Xv Ning，2011）.

III Theoretical analysis and hypothesis

The management is the builder and executor of the internal control system of the enterprise.A reasonable monetary compensation payment to the management might affect the decision-making behavior of the management and thus play a role in the quality of internal control information disclosure.At the same time，an impeccable internal control systemit also restricts the self-interest behavior of the management in setting abnormal monetary compensation for themselves.Therefore，some scholars believe that the defects of internal control and the opacity of information quality are conducive to the management to provide opportunities for their high monetary compensation.

However，if monetary compensation information be obtained by external information users through media channels， the high salary level will cause the outside world on the enterprise internal control defects，enterprise internal control information quality is not high suspicion.This suspicion can have a negative impact on management’s own reputation，as well as on further pay rises.Therefore，motivated by avoiding external doubts and maximizing their own interests，managers are more willing to disclose high-quality internal control information while setting high salaries for themselves.So，a hypothesis are proposed ：

Hypothesis：under the same conditions，the higher the monetary compensation of the management，the higher the quality of internal control information disclosure.

Ⅳ Empirical Analysis

1.Sample selection and data source

Considering that the Basic Norms of Enterprise Internal Control issued in May 2008，this paper intends to select a-share listed companies in Shanghai and shenzhen from 2008 to 2016 as research samples.In order to strive for the accuracy and reliability of data，we have implemented the following screening procedures：① exclude listed companies in the financial industry，because these companies have industry particularity；② remove all ST，ST* and PT companies in the sample interval to avoid the influence of abnormal values；③ exclude the companies lacking internal control information disclosure index； ④ in order to control the influence of extreme values on regression results，Winsorize was applied to the quantiles of continuous variables less than 2% and more than 98% of explanatory variables.Finally，this paper obtained 13，971 valid samples from 2，586 public companies in 9 years.

The corporate financial data and corporate governance data of this paper come from CSMAR database，and the data disclosed by internal control information come from DIB internal control and risk management database.

2.Variables

The quality of internal control information disclosure was chosen as the dependent variable of regression model，and the internal control information disclosure index （ICIDI） in the “DIB internal control and risk management database” was chosen as substitute variable，which is widely recognized as the substitution variable of the quality of internal control information disclosure.

The management salary of the management was chosen as the independent variable.The salary of the management is the total monetary compensation paid to the management by the company.The total annual salary data of directors，supervisors and executives of CSMAR database was chosen as the substitution variable.

3.Correlation Analysis

Table 1 lists the correlation test results of all variables in the whole sample company，which shows the Pearson product difference correlation coefficient among all variables.The correlation analysis results show that the monetary compensation of the management is positively correlated with the quality of internal control information disclosure at the significance level of 1%，which indicates that the monetary compensation of the management seems to have a significant positive impact on the quality of internal control information disclosure.This result shows increasing the monetary compensation of the management is conducive to the improvement of the quality of internal control information disclosure of listed companies，which verifies the hypothesis .

V Results

The conclusion of the correlation analysis indicates that there is a significant positive correlation between management compensation and internal control information quality.It imply that appropriate management monetary compensation plays a positive role in improving the quality of internal control information disclosure.High salary cannot absolutely guarantee honesty but transparent monetary compensation is conducive to promoting the consistency between the decision-making motivation and behavior of the management and the interests of the enterprise.

References

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作者简介

高铮雅（1994.02—），女，回族，河南平顶山人，在读研究生，云南大学经济学院，研究方向：内部控制。

赵康丽（1994.07—），女，汉族，湖北荆州人，在读研究生，云南大学经济学院，研究方向：审计。