Study On The Effect Upon Internal Control And Investment Based On Ownership Structure

China’s Ministry of Finance, the Commission, the Audit Commission, the CBRC, theChina Insurance Regulatory Commission jointly issued the first "basic norms of internalcontrol".It firstly carried out in the sphere of listed company in the July1,2009. Thepromulgation of the norms for economic reform, the establishment of modern enterprisesystem, strengthen internal management, protection of investors’ legitimate rights and toensure effective functioning of capital markets has a very important practicalsignificance. However, only from internal control in investment business, whether itachieved the desired economic consequences remains to be tested. For a long time,China’s investment rate is the highest in the world, investment efficiency has also been aguide to lay down policy, but China’s current investment rate is high at the expense ofthe efficient use of capital."Basic norms of internal control" has clear requirements:enterprises should strengthen feasibility studies on external investment, assess thecontrol on decision-making aspects, to ensure external investment decisions legal,scientific and reasonable. In theory, the promulgation of the internal control normsshould be able to solve the problem of low investment efficiency in a certain extent, butthe reality is that investment inefficiency is indeed very prominent, mistakes ininvestment decisions and management are still the main reason of investmentinefficiency.In addition, this paper further analyzes, mistakes in investment decisions andmanagement are intrinsically linked to Senior Management. Many factors in the internalcontrol, ownership structure in the internal control environment is the key to influencemanagement decision-making behavior, which is the basis of the property of internalgovernance, which determines a company’s ownership of the property configuration.Therefore, this article argues that internal control does not meet the expected economicconsequences and investment inefficiency has not been solved, enforcement of internalcontrol has yet to be strengthened.This study will be based on the theory and link to case studies and empirical research, divided into three parts to describe: the first part defined the major object of study inthis paper and introduced the theoretical basis of this study. The second part analyzedinternal control for the impact of investment efficiency with cases. In this section, acombination of our unique market environment and supervision system, by analyzingthe behavior of China’s listed companies to test the applicability of "basic norms ofinternal control"in China. The third part analyzed the impact of ownership structure oninvestment efficiency, and carried out an empirical test. In addition, this papersummarized the content of the study finally, from the research put forwardcountermeasures, pointed out the direction for the follow-up study.