Analysis Of Influence Of Private Listing Corporate Governance Structure On Effectiveness Of Internal Control

The separation of the two powers between ownership and management created theModern Corporation enterprise, and then produced the principal-agent relationship. In orderto prevent the agent problems and reduce the agency costs, Modern Corporations needgovernance structure and internal control system. Internal control effectiveness can beevaluated from five aspects.They are reasonably to assure enterprise’s legitimate business, tocomplete financial information truly, to improve the operating efficiency of the company andto promote enterprise development strategy. Many domestic and foreign financial fraud andcorporate bankruptcy failure cases show that the defect of corporate governance structurecauses the company’s internal control failure. In recent years, with the growing of privateenterprises, the problems they reflect become more and more serious. GOME ElectricalAppliances, the battle for control between Huang Guang Yu and Chen Xiao on the year of2011, the problems of private listing Corporation governance once again become the focus ofresearch.This paper chooses2009-2011year1043board small and medium-sized private listingCorporation sample data to do empirical studies. It selects board of directors, independentdirectors, board of supervisors share scale, the number of the specialized committeeestablished, shareholders at the annual general meeting attendance, ownership concentration,board leadership structure, the board of directors and supervisors and Senior managementbefore the three total compensation as the explanatory variables that has the effect to theinternal control to represent corporate governance structure, through principal componentanalysis, descriptive statistics, single variable analysis and multivariate linear regressionmethods, with the empirical study of China’s small and medium-sized board private listingCorporation internal corporate governance structure on the effectiveness of internal control.The study finds: the size of board of directors, the size of the board of supervisors and theratio of the independent director, the number of the special committees, annual generalmeeting of shareholders shares attendance has a significant positive relationship with internalcontrol effectiveness. The ownership concentration and the leadership structure of the board ofdirectors have a notable negative relationship with internal control effectiveness. Executive pay is no significant correlation with internal control effectiveness. Based on the results ofempirical research conducted in-depth analysis, think that the corporate governance mainlyfocuses on the processing constraints, supervision and incentive problems, the focuses ofinternal control is the control of enterprise decision making and implementation and thespecific business activities. Modern enterprise should take the two powers rooted in theenterprise supervision system to prevent and punish corruption and into the enterprisemanagement system to reduce the company governance cost and give full play to supervisionsystem of the whole functions and effectiveness. From the perspective of corporategovernance put forward to establishing clear responsibilities, independent and effective boardof directors; strengthening independent director duties; strengthening the legal responsibility,specific individual rights and obligations of the board of supervisors; establishing reasonableownership structure policy recommendations.In this paper, the main innovation point is that specializing in small and medium-sizedplate of private listed companies and when calculating the internal control effectiveness index,considering the assets security objectives and using the asset impairment losses and the rateof shareholders value maintaining and increasing to express it.