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Research On Economic Consequences Of Internal Control Of Listed Companies In China

Posted on:2017-04-29Degree:DoctorType:Dissertation
Country:ChinaCandidate:L RuanFull Text:PDF
GTID:1109330482995599Subject:Business Administration
Abstract/Summary:PDF Full Text Request
The China’s "Enterprise Internal Control Standards" and its supporting guidelines cause extensive debate and concern about its advantages and disadvantages among enterprise managers, outside investors, policy makers, regulators and other parties of interest groups. Especially current economic downwards pressure continues to increase, the business context is increasingly difficult, we have paid more attention to the influence of internal control on enterprise manage costs. The universality, necessity and mandatory of internal control implementation have been severely questioned. But after extensive continuing debate of China’s policy making departments and academic community, internal control system has withstood the test and questioned from all parties of interest groups, and becoming an important means to enterprise internal management in China. Based on the incompleteness of current China’s capital market and the interests that all parties concerned, we believe that the economic consequences of the internal control have important theoretical and practical significance. Specifically, this research related to the influence of corporate decision-making on internal control, especially on financial making behavior and the influence of internal control on enterprise value-driven. Because of the differences of current researches on capital market environment, sample selection, model building and measurement methods, the conclusions are not the same, which further highlights the significance and value of this research.With the full implementation of China’s enterprise internal control specification system in 2014, researches of internal control’s economic VI consequences, particularly those based on mandatory background, have been a key topic to this system smooth “landing”. Basically, targeted analyze the difficulties in current internal control standard system implementation, systematic study the economic consequences of internal control standard system have great practical significant to enhance managers’ enthusiasm to standard system implementation, to steadfast policy makers’ confidence to push the system, and to protect investors’ and public interests. Therefore, the paper focuses on researching the influence of internal control on enterprise investment and financing decisions, working capital decision, dividend distribution decisions and enterprise valve according to define the theory of internal control economic consequences, which tests the economic consequences of internal control on certain extend, and put forward the corresponding policy recommendations. In certain research, we mainly use the research methods of the combination of literature, normative and empirical researches, trying to achieve a certain degree of innovation in research ideas, contents and methods.Firstly, there are different definitions and understandings on internal control economic consequences in academic community during researching internal control. In view of broad and ambiguity of economic consequences concept, an important research content of this paper is to combine economic consequences theory and practice of its study, to make a systematically definition on it. We also make a systematic theoretical analysis of investment and financing decisions’, working capital management decisions’, dividend distribution decisions and enterprise value’s economic consequences, which also provides a clear conceptual framework and theoretical basis for subsequent empirical research.Secondly, according the literature review, we can find that internal control has great effect on investment and financing decisions and the conclusion of the two are much more similar. So we don’t make repetitive empirical test on the relationship between two, but mainly research the influence of internal control on working capital management decisions and dividend distribution decisions.For working capital management decisions, we construct the path that how internal control influence on enterprise working capital management decisions from direct and indirect aspects. We also using Shanghai and Shenzhen A-share main board listed company’s annual report data during 2004 to 2013, which based on adopting the comprehensive measurement of working capital turnover period and working capital productivity for working capital management performance, to test the correlation of internal control and working capital management decisions. The research finds, firstly, there is significant positive correlation between the two; secondly, internal control can optimize working capital productivity by shortening working capital period to enhance working capital management performance; thirdly, the negative correlation between the two is achieved by shortening accounts receivable turnover, inventory turnover period and accounts payable turnover period at the same time. However, the amplitude of shortening accounts receivable turnover and inventory turnover period is greater than shortening accounts payable turnover period.For dividend distribution decisions, this paper takes principal-agency theory and LLSV(2000) dividend payout model as references, built two routes of the influence of internal control on cash dividend payment policy: outcome model and substitution model. Further using Shanghai and Shenzhen A-share main board listed company’s annual report data during 2004-2013, we test the relationship between internal control and cash dividend payment by panel Logit model and panel Tobit model. The result shows: high quality of internal control can effectively enhance listed company’s dividend payment and level; compared with state-owned enterprise, positive correlation between internal control and cash dividend payment in non-state-owned enterprise’s sample is significantly lowered, but the positive correlation with pay level is not significant; further causality test also ruled out the internal control and cash dividend payment endogeneity problem may exists between the two, to ensure the robustness and rigor of the conclusions.Finally, we back to the resource of internal control economic consequences: enterprise value. This paper considers that all researches about internal control economic consequences can ultimately be attributed to the impact on enterprise value. But considering there may be a two-way influence of causality between two, the conclusions of the two will be largely impacted, so we on the basis of using panel Granger causality, and take Shanghai and Shenzhen A-share main board listed company’s balance panel data during 2004 and 2013 as sample, empirically test the relationship between internal control and enterprise value. We find: there is no two-way causality between two, internal control is just the Granger reason to impact enterprise value; there is significant positive correlation between two, and this relationship is more significant in state-owned enterprise sample; with time and space go by and the implementation of internal control system, the relationship between two has been further strengthened; further interaction variable regression analysis results also show that internal control and financial decisions can be combined, adjusting a positive impact on the valve with each other, and achieve “1+1>2” synergistic effect on enterprise value.
Keywords/Search Tags:Internal control, economic consequences, working capital management decisions, dividend distribution decisions, enterprise value
PDF Full Text Request
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