The Research On The Influencing Factors Of Internal Control Index Of Listed Companies

In recent years, major U.S. financial fraud cases have occurred, making theinternal control into a cusp, A growing number of scholars and entrepreneurs arebeginning to focus on internal control problems in China. This also has started anupsurge. On the one hand, China’s economy started relatively late, laws are notperfect, external regulatory agencies`supervision is absent. On the other hand,enterprises have the issue that the phenomenon which management philosophy hasnot yet been formed internally; inefficient oversight of "two sessions"; unreasonableorganization structure, personnel policies mispairing; weak risk awareness and otherissues. Therefore, the construction of chinese enterprises internal controls have notformed a perfect and formal system. The construction of chinese enterprises internalcontrol is undergoing in an exploratory period. From the year2008to2011, Diboenterprise risk management company announced four white books on the internalcontrol, score the enterprises according to the five factors of “The basic standard forenterprise internal control”. In the year of2011, the Research Group of the Ministryof Finance declare the internal control index of Chinese Listed Companies, whichbring the research of the chinese enterprises internal control into a new age andstarted the quantitative standard of internal control. This article is to study the impactof the level of internal control factors in this contextThis article studies the level of internal control, selecting internal control indexreleased by the Ministry of Finance as the level of internal control standards, byreviewing a large number of previous literature, from basic characteristics of enterprises, corporate governance and five factors of “The basic standard forenterprise internal control” this article explored the factors affecting the level ofinternal control. This article has selected time to market, stock exchanges, companysize, the chairman of the board serve as CEOs, the nature of the company’s actualholding, the holding proportion of board members, board size, the salaries ofmembers of the top three board of directors, board of supervisors scale and theconcentration of the top ten shareholders equity, with the10impact factors, Weconstructed a multivariate regression model. Obtain the relevant data from the theCSMARdatabase and the Genius database, Using Excel and SPSS17.0to analyze data.This article concluded that the length of time to market are negative correlative withinternal control index, the level of internal control of enterprises in Shanghai StockExchange are far more higher than it of Shenzhen Stock Exchange, the chairman ofthe board serve as CEOs are negative correlative with the internal control level, theinternal control level of state controlling enterprises are better than the non ones, theholding proportion of board members are positive correlative with the internal controllevel, the concentration of the top ten shareholders equity is positive correlative withinternal control level. Through the discussion of the factors impacting the internalcontrol level, we can help enterprises to find effective methods to improve internalcontrols, improve the internal control system through comparison. Furthermore, in therobustness testing part, this paper sampled the listed companies in Northern China,from the perspective of five factors of “The basic standard for enterprise internalcontrol”, to construct the “Five Factors Index” of “The basic standard for enterpriseinternal control”(Five Factors Index for short in the below), and carry out theanalysis of correlation of the Five Factors Index and internal control index releasedby the Ministry of Finance, verify the scientificalness and rationality of the design ofinternal control index published by the research group of the Ministry of Finance.The result showed that the Five Factors Index and each factor of the five ones are positive correlative with the internal control index. Thus it can help to prove thescientificalness of internal control index released by the Ministry of Finance. Thisalso provided a convenient way to judge a enterprise, which can help to guide themajority of investors to devote resources to excellent businesses, and achieveeffective use of social resources, to improve the market mechanism.