An incomplete game analysis on information disclosure of internal control

This paper studies under the background of the gradual warming of Chinese Government's attention on the internal control, uses the method of game theory, and analyzes the authenticity of internal control disclosure of listed companies from the view of static game with incomplete information. By analyzing, we find that several factors affect the authenticity of internal control information, they are supervision frequency of regulatory authorities, punishment cost, the cost that listed companies color their internal control information and the degree of adverse effect when false disclosure of internal control is found by regulatory authorities, so institutional arrangements are very important to improve the information disclosure of internal control. Then we analyze the status of China's internal control disclosure system, and compare with the relevant laws and regulations in the USA. With the conclusion by game analysis, we provide several suggestions for regulating the information disclosure of internal control on listed companies.