Research On Governance Effects Of Internal Audit Funtion Of Companies

With the development of economic, the enterprise ownership and management rights for further separation. The owner of the enterprise almost no longer participate in the daily operation and management of the company, but the full delivery to the operator to carry on the management, which leads to the problem of information asymmetry between owners and managers. With Enron, WorldCom and frequent as the representative of the financial fraud cases, the internal audit and corporate governance has become the focus of the academic focus of attention and discussion. Scholars think that the corporate governance is that a company can effectively, legal compliance to run a system framework, and the internal audit is a core of this framework system. It gets through the enterprise information channels, alleviate the problem of asymmetric information between the owner and the operator, at the same time, through the supervision and evaluation of enterprise production and management in all areas of management, timely correction of loopholes in the enterprise, improve the internal control system, improve corporate governance.This paper from the principal-agent theory, accountability theory, corporate governance theory discussed the theory of internal audit, and probes into the relationship between internal audit and corporate governance, the mechanism and the internal audit in corporate governance. Combined with the background of market economy in China, collect the released by the Shanghai Stock Exchange listing Corporation in2004to2011data, an empirical analysis on the changes before and after the establishment of the listing Corporation internal audit firm performance.The reaserch show that (1) listing Corporation set up internal audit department, because the internal control is more perfect, so the company’s ability to resist risks than before the establishment of the internal audit department is stronger, at the same time, because the management behavior of internal audit can restrain the enterprises violate the law and discipline, so the listing Corporation set up internal audit department, the China Securities Regulatory Commission to reduce the probability of punishment;(2) in all areas of the internal audit into the enterprise management and subtle link, in perfecting internal control, are also more likely to find the irrationality of the operation and management of enterprises, help enterprises to reduce unnecessary losses, and improve the profitability of enterprises. And comprehensive supervision and management of internal audit behavior to reduce the signs of financial fraud companies and counterfeiting, therefore listing Corporation set up internal audit mechanism, the probability of the CPA audit opinions reports also improved;(3) the more strong the independence of internal audit, membership level is high, play in the process of internal control the greater the role, the stronger ability to resist risk, also can be a better deterrent management layer, the law-abiding, thereby reducing the probability of receiving Chinese company to csrc.Finally, combining with the actual situation in China and puts forward some policy implications, and the internal audit role in corporate governance are discussed from theoretical and empirical perspective. For the first time before and after the establishment of the listing Corporation internal audit department’s performance were compared, to broaden the management effect of internal audit on the field, it is a useful attempt to explore effect of internal audit in corporate governance.