The Empirical Research Of Relationship Between Check-and-balance Ownership Structure And Direct Financial Consequences Of Internal Control Invalidation

By considering the different nature of the balance shareholders,equity and thedifferent nature of the controlling shareholders,equity, this paper which choose themanufacturing listed companies from2008to2010in Shanghai stake as a samplestudies the relationship between the check-and-balance ownership structure and thedirect financial consequences of control failure. On the basis of the check-and-balancecompany were grouped, the paper use the method of T-test and multiple linearregression to prove the following conclusions:(1)companies with check-and-balancestockholders accept less direct financial consequences of internal control invalidationthan the companies with absolute controlling stockholders;(2)compared with thestate-control companies with state-owned balance stockholders, the state-controlcompanies with private balance stockholders will take less direct financialconsequences of failed internal controls;(3)compared with the private-controlcompanies with state-owned balance stockholders, the private-control companieswith private balance stockholders will take more direct financial consequences offailed internal controls;(4)compared with the state-control companies with privatecheck-and-balance stockholders, the private-control companies with privatecheck-and-balance stockholders will take more direct financial consequences of failedinternal controls. Although not supported by the T-test, according to the mean andstandard deviation, we can see that the difference of direct financial consequencescaused by the failure internal control between private-control companies withstate-owned balance stockholders and the state-control companies with state-ownedbalance stockholders exists. Compared with previous studies, which mainly considerthe equity balance in the perspective of equity balance degree, the innovation of thispaper lies in the consideration of the nature of stockholders and its impact on internalcontrol. And at the same time, in contrast to so many earlier normative studies aboutthe failure of internal control, this paper gets more useful empirical results to supportthe research.