Empirical Research On The Impact Of The Corporate Governance Feature On Corporate Internal Control

Overconfident theory(OFT) amends the weaknesses of the classical financial theory for individual behavior analyzing and its research method,which helps the financial theory come more close to the reality.Based on the basic principle of psychology and economics,OFT can improve the quality of business decision-making. Since the establishment and perfection of internal control are some kinds of human behavior,they are undoubtedly affected by the personality or the mode of the managers.By controlling the influence of the governance structure,this paper tries to put the management overconfidence into the governance feature and to demonstrate the impact on the internal control.So far,most of the related research is focusing on the effect of the management to the corporate' concrete financial behavior,leaving the research in terms of the internal control undetached,which is the main concern of this paper.By using the normative and positive analysis,this paper first figure out the impact of corporate governance management overconfidence on the internal control on theory,and then empirical evidences are shown to support this.This paper comes to four conclusions:a.Because of the unique stock ownership structure in China,with the increase of the degree of equity balances,the level of the internal control rises slightly,but not significantly;b.Independent directors are not doing their job well in terms of improving corporate internal control level;c.It significantly decreases the level of the internal control if CEO(chairman of the board) holds the concurrent post of chairman of the board(CEO);d.Management overconfidence influences corporate internal control profoundly,for the reason that it would observably offset the positive effect of the internal control if there exists management overconfidence.