| Since the 1990s,with the gradual establishment of market economy system and the expansion of enterprise autonomy,the SOEs in China have developed vigorously.However,executive job-related crimes have shown a trend of multiple occurrences,among which the executive job-related embezzlement accounts for the highest proportion and has the most complex causes.Essentially,executive job-related embezzlement refers to the illegal and criminal acts that senior executives take advantage of their positions and authority to seek illegal interests for individuals,including corruption,bribery,insider trading,embezzlement of public funds,crime of unclear huge property and crime of privately distributing state-owned assets.It's featured with "turning public into private" and "filling private pockets",which is thus a more common criminal offence in SOEs.Admittedly,executive job-related embezzlement's a kind of multiple-occurrence phenomenon in SOEs,which engulfs the achievements of enterprises,seriously disturbs the social and economic order,and destroys social harmony and stability.However,theoretical and empirical research related to it is rare.The Academia has studied and explored the causes of executive job-related embezzlement from the perspectives of internal governance mechanisms,external governance constraints and compensation incentives.Despite all this,most of the literatures neglect to make a detailed study of executive job-related embezzlement in light of different crime types.Hence the findings and conclusions are ambiguously helpful to prevent and reduce executive job-related embezzlement in SOEs.Taking Professor Zhang Rui as a representative,some scholars have carried out in-depth research and discussion on the executive job-related embezzlement from a wide range of perspectives.However,it provides this paper a chance for further study that they've not fully considered the influence of the expansion of managerial power upon the job-related embezzlement in the institutional setting of SOE reform and power decentralization policy.Since 1984,our government has carried out the decentralization reform of SOEs,whichaims to expand the autonomy of SOEs.The gradual downward transfer of power by the central or local governments has led to unprecedented strengthening of managerial power.In the process of decentralization reform,the "first-hand" power culture,which has been bred for a long time under the "first-hand" responsibility system and the centralization system,has led to concentrate the right to dispose human resources,financial resources and properties in the "first-hand" leaders in SOEs.Compared with the central listed SOEs,the principal-agent relationship of local listed SOEs is more complex,and the managerial moral hazard under decentralization reform is more serious.Is decentralization reform a potential institutional incentive for the incubation of executive job-related embezzlement in local SOEs? Will managerial power induce executive job-related embezzlement? If so,what is the underlying mechanism of action?If managerial power's the key inducement of executive job-related embezzlement,then the cage that binds power to the system,through a mechanism to check and balance managerial power and restrain managerial power from inducing executive job-related embezzlement,will be an effective governance method.In the important documents promulgated by the Communist Party of China and the Chinese government,government audit's always been regarded as a power restriction and supervision mechanism.In 2018,the Third Plenary Session of the Nineteenth Central Committee proposed to strengthen and optimize the CPC's leadership of government audit work,to set up the Central Audit Committee,to integrate and optimize the resources of economic supervision,to enhance the effectiveness of audit supervision,which brandished a sword at "abuse of power".Government audit has thus become a hot research topic in recent years.The extant research's focusedupon government audit restricting public power in the hands of government departments and officials.The relationship between government audit and power restriction has been discussed extensively from motivation,essence and path of government audit.However,there's a lack of attention to the managerial power in SOEs which are micro-organization.Will government audit restrict the managerial power in SOEs,thereby restraining the occurrence of executive job-related embezzlements? If so,what is the mechanism of action? Systematic answers to the above questions will be helpful to deepen the understanding of the incentives of executive job-related embezzlements and promote corresponding governance practice.Based on the theoretical and the practical significance,this paper intends to explore the correlation among managerial power,government audit and executive job-related embezzlement,taking into account the institutional setting of power decentralization policy and government audit supervision policy implemented in Chinese SOEs.Firstly,it sorts out,summarizes and comments on the related literatures of executive job-related crime,managerial power and government audit.Secondly,it introduces the concepts and dimensions of managerial power,the concept and types of executive job-related embezzlement,the concept of government audit and relevant institutional settings as well as theoretical explanatory bases.Thirdly,it specifically analyzes how executive job-related embezzlement is induced by managerial power and reduced by government audit.Analysis process adheres to the overall analysis framework "power concentration,power rent-seeking,executive job-related embezzlement,government audit governance",with the aid of theoretical explanatory bases,namely principal-agent theory,rent-seeking theory,fraud triangle theory and power restriction theory.And then it proposes hypotheses and establishes empirical models.Thirdly,it selects the local SOEs listed in Shanghai and Shenzhen Stock Exchanges from 2003 to 2015 as the research target,and conducts empirical test of the relationship among managerial power,government audit and executive job-related embezzlement.Finally,according to the research topics and the regression results,this paper gives recommendations on supervision policy and government audit practice,taking into account the institutional settings in China.Generally speaking,two main conclusions' re drawn and mentioned as follows.(1)There's a positive correlation between the intensity of managerial power and the probability of executive job-related embezzlement.Unidentified ownership of stated-owned property and multi-level principal-agent chain result in power being concentrated and held by the executives of local SOEs.Under the succesive action of motivation(pressure),opportunity and excuse,the managerial power leads to executive job-related embezzlement which's a rent-seeking and profit-grabbing behavior.Managerial power is the source of motivation(pressure)for the executives in local SOEs to commit job-related embezzlement.Managerial power stimulates executives to actively seek or create opportunities to commit job-related embezzlement,and leads the unequal residual control rights and residual claim rights to be the excuses for executives to commit job-related embezzlement.From the point of view of single path,firstly,under the pressure of approaching wealth caused by power,executives blindly pay attention to the income generated by executive job-related embezzlement,and underestimate potential reputation risk and prison risk.Pressure boost increases the motivation of executives to carry out executive job-related embezzlement,consequently increasing the probability of criminal acts.Through the role of risk awareness,gender differences in management and corruption level of regional officials have a certain impact on forming the motivation of executive job-related embezzlement.Female executives are less likely to use their power to commit job-related embezzlement than male ones.Because female have the characteristics of risk aversion,the low proportion of female executive will strengthen the inductive effect of managerial power on the executive job-related embezzlementwith respect to the motivation.The higher the degree of corruption of regional officials,the greater the possibility that the managerial power will induce the executive job-related embezzlement.That is to say,the demonstration effect of corruption by regional officials will strengthen the inductive effect of managerial power on the executive job-related embezzlementwith respect to the motivation.Secondly,the lack of internal and external supervision in local SOEs leads to weak supervision environment,which provides a favorable objective environment for executives to commit executive job-related embezzlement.Executives may use control rights to interfere with the quality of internal control and arbitrarily control the use of free cash flow,and actively create rent-seeking space within local SOEs,thus creating opportunities for implementingexecutive job-related embezzlement.The quality of internal control is negatively affected by managerial power.The lower the quality of internal control is,the stronger the inductive effect of managerial power is on the executive job-related embezzlementwith respect tothe opportunity.The more free cash flow is,the more likely managerial power will induce executive job-related embezzlement.That is to say,the increase of free cash flow strengthens the inductive effect of managerial power on executive job-related embezzlementwith respect tothe opportunity.Thirdly,the managerial power strengthens the self-esteem consciousness of executives in local SOEs,which leads to higher salary expectations.When the salary expectations of executives can not be met,the unequal residual control rights and residual claim rights become the excuse for executives to commit executive job-related embezzlement.The internal and external pay gap will further affect the executive's evaluation of whether the personal salary expectation being satisfied,and promote the formation of the excuse for executives to commit executive job-related embezzlement.With the external/internal remuneration gap getting smaller,executives' re more likely to form a negative mentality of self-interest being eroded,and thus to use their power to commit executive job-related embezzlement.From the point of view of overall path that managerial power induces executive job-related embezzlement,power increases pressure formost,then executives seek or create conditions to release pressure,think of a seemingly rationalized excuse lastly.Therefore,pressure,opportunity and excuse show a progressive impact upon the executives to make a "rational" decision on whether to commit executive job-related embezzlement.Structural power,ownership power and prestige power embodied in managerial power are all more likely to induce executive job-related embezzlement,while expert power is more likely to be used for productive activities.The managerial power has a significant positive impact on the number of criminals and the crime amount,but not on the crime types.Executive job-related embezzlement is nibbled away at the corporate value before the crime is revealed.Executive job-related embezzlement is a kind of unproductive activity,which will cause huge loss of enterprise assets and hollow out enterprises.This illegal act has nibbled away the corporate value before the crime is revealed,which shows that it's necessary and urgent to strengthen the governance of executive job-related embezzlement.After various robustness tests,it's found that the conclusion of main test is relatively reliable.(2)Government audit can effectively reduce the executive job-related embezzlement induced by managerial power.As a mechanism of supervision and restriction,the government audit,by increasing the input and the accountability evaluation,can reduce executive job-related embezzlement effectively as a result of functioning at the original causes which are motivation and opportunity.Specifically,financial revenue audit,accountability audit and special follow-up audit ensure all the state-owned assets and resources are supervised by government audit.Since the disclosure function of government audit increases exposure of executive job-related embezzlement,and the punishment function of government audit causes enormous psychological pressure "reach out and be caught" upon executives,the executives' risk awareness of rent-seeking is enhanced and the motivation of rent-seeking with managerial power can be weakened.By inspecting the internal control of local SOEs,the government audit finds the loopholes in the internal management and puts forward some suggestions for improvement,reducing the managerial power's internal rent-seeking space and effectively preventing the executive job-related embezzlement caused by abuse of power and out-of-control power.Because of the long-term effectiveness of government audit guaranteed by the authoritative provisions of laws and regulations and the significance attached by the highest leading organisations and the national leaders of China to government audit,the strong independence of government audit institutions in terms of organization,power,work and funds,the professionalism embodied in audit patterns,audit contents and audit methods,the government audit strengthens the external regulatory environment of local SOEs and reduces the external opportunities of executive job-related embezzlement.The increase in the input and the accountability evaluation of government audit will be beneficial to the improvement of the overall quality of internal control and the quality of five elements respectively,and can effectively reduce the internal opportunities for managerial power to induce executive job-related embezzlement.The governance effect of the input and the accountability evaluation of government audit over reducing executive job-related embezzlement which's induced by managerial power,is further strengthened in superior institutional environment,indicating that there's a complementary effect between institutional environment and government audit.The governance effect of government audit input over reducing executive job-related embezzlement which's induced by managerial power is further strengthened when the media supervision is enhanced,while the governance effect of government audit accountability evaluation is not significantly affected by media supervision.Government audit input and government audit accountability evaluation are more effective in reducing executive job-related embezzlementwhen CPA audit shows lower quality,indicating that there's a substitutional effect between government audit and CPA audit.To sum up,on the basis of theoretical analysis of managerial power's inducement toexecutive job-related embezzlement and the governance effect of government audit,this paper takes local listed SOEs and their executives as samples and empirically tests the correlation among managerial power,government audit and executive job-related embezzlement,which aims at deepening the knowledge about managerial power,improving the governance effect of government audit over the micro-level market participants,and optimizing the governance practice about reducing executive job-related embezzlement.The possible innovations are as follows: from the perspective of managerial power,the analysis of the factors and paths of managerial power inducing executive job-related embezzlement enriches the relevant literature on the influencing factors of executive job-related embezzlement;linking managerial power with the extreme economic consequences of executive job-related embezzlement broadens the research perspective of the economic consequences of managerial power;placing government audit in the supervisory and governance system of executive job-related embezzlement,this paper systematically expounds the restrictive essence of government audit on the managerial power in local SOEs which're micro-organizations and the governance path of executive job-related embezzlement induced by managerial power,empirically tests the governance effect of government audit,and provides convincing countermeasures for the governance practice of executive job-related embezzlement with incremental empirical evidences.The following policy suggestions are put forward:to guide the executives of SOEs to establish a correct view of power use;to actively explore the executivejob-relatedembezzlementrisk oriented big data audit model;to steadily promote the coverage of government audit;to increase the input and the accountability evaluation of government audit by establishing the audit funds guarantee mechanism,promoting the professionalism of government auditors,establishing and improving the accountability system of government audit.In addition,it's suggested to further improve the institutional environment,especially to reduce the government's interference in government audit work and improve the level of legal institution,to improve the media supervision mechanism and strengthen the interaction between government audit and news media,and to make full use of CPA audit when government audit encounters resources shortage and heavy audit workload,by which government audit should reduce executive job-related embezzlement more effectively. |
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