The Significance of Information Systems under Internal Control Regulation

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  • 内部統制報告制度における情報システムの意義
  • ナイブ トウセイ ホウコク セイド ニ オケル ジョウホウ システム ノ イギ

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Abstract

<p>This paper investigates conditions for existence of equilibrium in which a shareholder can derive both business effort and control effort from a management who should be subject to audit under internal control regulation. Given these conditions, I shed light on the significance of business information system and control information system for the shareholder. The main results contain (1)Even though a private cost of business effort increases as a result of the increase of control effort, there exists a favorable equilibrium for the shareholder if an audit cost base is set sufficiently low, (2)When business information system and control information system have about the same precision, the shareholder might prefer to invest in the former, (3)When the regulation is supposed to be tightened, the more severe the regulation is, the more the shareholder could expect preferable effect due to investment in business information system, (4)Even though the audit cost base is supposed to be raised, the shareholder of large company that has precise control information system could compensate the decrease of her expected utility by investing in control information system.</p>

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