Study On The Relationship Of Ownership Structure, Executive Compensation And Effectiveness Of Internal Control

Internal control is helpful to improve the enterprise management and ability of risk prevention. How to improve the effectiveness of internal control has become a problem for the current Chinese listed companys which are need to streamline management mechanism and perfect modern enterprise system.The internal control system can not exist alone,it grows and perfects with the corporate governance.Corporate governance is the foundation and guarantee to internal control,effective internal control can improve the internal management mechanism and guarantee stakeholder interests.Ownership structure is closely related to internal control.Reasonable structure has direct affect to the efficiency of elements,it also affects the internal control system that is formulated scientificly and implemented effectively or not.The executives of listed companys are the executor of the corporate governance policy and makers of internal control rules, their attitude directly determines whether the internal control in the company is effective.Reasonable incentives can solve the principal-agent problem between shareholders and executives and provote them to establish and improve internal control system to enhance the company's operating efficiency. Therefore, the ownership structure and executive compensation is closely related with the effectiveness of internal control.This paper mainly discussed how the ownership structure and executive compensation to effect the efficiency of internal control.With the listed companies data in shenzhen exchanges of 2008 and empirical method, drawing the conclusion: the internal control system of the listed companies in China is not perfect but with many defects;to maintain a reasonable ownership and proper ownership balance is helpful to improve the validity of internal control and this effection is more remarkable in state-owned enterprise;improving executives shareholding is also helpful to the internal control; ultimate control and executive pay scale have unsignificance effect to internal control system.Finally, based on the empirical results and conditiongs the listed companies faced in China,puting forward corresponding policy and recommendations. The theoretical analysis of this paper is helpful to enrich the internal control theory system.The empirical study on the relationship of them can provide reference which is valuable to improve the effectiveness of the internal control system.