Construction Of The Internal Control System Of Chinese Quoted Companies Empirical Analysis Based On Retail Companies Of A Shares

Separation of proprietary rights from management rights makes people focus on different scopes and nature of the internal control system, which has ignored the inherent relevance and consistency of it. Therefore, although the content of this field has been studied, but there is no real improvement in companies'internal control. The reason is the neglect of the connection between corporate governance and management and their relationship in internal control. According to the principle of the system integration and difference of control levels, internal control can be divided into corporate governance contacted with proprietorship right and corporate management associated with management right, but corporate governance, the basis of internal control, has been neglected for its contact with corporate management, which results in the internal control is merely a piece of paper and cannot really work. At the corporate governance level of the quoted companies in China, the dominance of state-owned shares could not restrain his agents which causes low efficiency, meanwhile there is basically no the external control market (the manager market and the corporate control market) and the regulatory agencies act on their own ways caused such internal control of quoted companies cannot be improved, just as without the skin, hair can not adhere; On the other hand,at the corporate management level:the control is not comprehensive; enterprise leadership set themselves up over the management system; poor information and communication channels that enterprise orders are more than comprehensive communication, coupled with no independent internal audit and mismatching of accountants'power and responsibility which cause failures of internal control. Therefore, to achieve good results of the internal control system, we should re-examine our internal control systems on systematic perspective, begin on the foundation to improve corporate governance, and then improve corporate management.This paper starts with the concept of internal control, then expounds the relation between corporate governance and corporate management in the internal control and analyzed the current situation of quoted companies'internal control from these two aspects. Based on analyzing 60 Chinese A-shares of retail companies, firstly the author finds two levels, of evaluation index system, including seven corporate governance evaluation index such as the size of the board, the directors proportion, independent director incentive scheme, times of the board meetings, whether chairman and CEO is the same person, whether the first majority shareholder is state-owned, the ratio of shares held by the first majority shareholder to the total shares held by other shareholders and sustainable rate at corporate management level. Then the author uses entropy method to give these index weight, classifies these quoted companies by the grey fixed weight clustering, and proposes to construct an internal control system which is suitable for their own company on a systematic perspective: from the influencing factors of big system to small system, then the author simulates a mini system of inventory by the principle of system dynamics and finds the leverage point (Key Point of Control) by analysis of this system, which is expected to help enterprise restructure its internal control system. At the end of paper, the author gives some suggestions of improving the internal control system according to the corresponding problems, such as suggestions of improving the corporate governance: decreasing shares held by state-owned while increasing shares held by the board, establishing a good external competition market and perfecting external supervision, and suggestions of improving the corporate management: re-examining the internal control system,implementing human-nature management, supply chains and information systems improvement.