The Research Of The Internal Control Effectiveness Influenced By Board Of Directors And Board Of Supervisors In Listed Corporations

Internal control is helpful to improve the enterprise management, the ability of risk prevention. How to improve the effectiveness of internal control has become a problem for the current Chinese listed corporations which are need to streamline management mechanism and perfect modern enterprise system. Suitable structure of board of directors will have effect on not only the efficiency of elements and strategy of the corporation, but the internal control system which is formulated scientifically and executed effectively. What's more, the board of supervisors is responsible to general meetings of shareholders, board of directors and employees in the company. By supervising the board of directors and managers, Board of supervisors will guarantee the achievement of corporation interests and shareholder interests. It will also audit whether board of directors is managing legally and correctly or not, so as to promote the effectiveness of internal control. Therefore, board of directors and supervisors have a close relationship with internal control effectiveness.The paper explores the influence of internal control effectiveness by characters of board of directors and supervisors. First of all, we explain the definition of internal control and its theory and analyze the relationship among board of directors as well as supervisors and internal control effectiveness. Second, by the COSO internal control integrated framework and related literature, we have a conclusion of the standard of listed corporations whether are internal control effectiveness or not. Then based on the listed corporations punished by the Chinese Securities Regulatory Commission in 2006-2011, the paper has a comment on listed corporations of internal control ineffectiveness. We choose 73 listed corporations among the punished companies for samples of listed corporations of internal control ineffectiveness. And according to the standards of listed corporations which are internal control effectiveness, we also choose 73 listed companies for pair samples.In the empirical research, by the standard of listed corporations whether are internal control effectiveness or not, we analyze the status quo of internal control effectiveness in out country. Then we use methods of descriptive statistics, correlations and multiple linear regression in SPSS to explore the influence of characters in boards of directors and supervisors to internal control effectiveness and make a conclusion. Internal control systems in our country is not complete. We should improve the professional percentage of professional members in independent directors and board of supervisors, properly manage the times of meetings held in board of directors and board of supervisors, increase the share percentage in these two boards. At last, integrated internal and external environment of listed corporations, we make some suggestions of improving internal control effectiveness.The paper has explored the relationship among board of directors as well as supervisors and internal control effectiveness in order to enrich internal control effectiveness system. In addition, we have examined the influence between board of directors as well as supervisors and internal control effectiveness and proposed measures to promote internal control system, which is helpful to enhance internal control effectiveness during the companies' operation and management.