The Study Of The Influence Of Check-and-balance Ownership Structure To Internal Control Effectiveness

According to the description of the COSO internal controlframework, internal environment is the most basic elements of internalcontrol, as well as the premise of other elements. So it is reasonable thatdiscussing the effectiveness of internal control from the perspective of theenvironment. Although the scope of environment is so broad, but themost basic core is the company’s internal governance structure, it playsthe dominant role in the quality of the internal environment.Check-and-balance ownership is in trouble as the consequence of thecombat of control right in Hongzhi technology company, with thecombination of the two dimensional internal control effectivenessevaluation system which is oriented by goal, the paper will analysis theinfluence of ownership structure on internal control effectiveness, and tryto study the influence of the internal control effectiveness from theperspective of equity check-and-balance by the method of case analysis,so as to come up with some suggestions about strengtheningcooperation’s internalcontrol level.This paper firstly defines the control shared by several stakeholdersthrough theories of check-and-balance ownership, it is clear that effectivecheck-and-balance ownership means relatively decentralized structureand effective relationship, namely analysis the ownership from theperspective of conditions and proportions. Secondly, through the description the influence mechanism between check-and-balanceownership and internal control effectiveness, it is clear that differentcheck-and-balance equity lead to different management decision-makingbehaviors, thus it make a large influence on the internal controleffectiveness. Through the definition of internal control effectiveness, theeffectiveness is measured by evaluating the target whether riskmanagement integration framework organized by the COSO committeeand the internal control norms in our country. Thirdly, in the base ofinternal control effectiveness oriented by the goal, this paper proposes atwo-dimensional perspective evaluation system of internal controleffectiveness which is―control risk adds overcome strategy‖, and thenthis paper evaluates the sample’s internal control effectiveness with thismind. At last, this paper defines samples at the bases of the nature ofcontrolling shareholders, industry characteristics, financial status,co-operations culture and other factors, thus we can limit ownershipstructure left. In the consequence of the two-dimensional perspectiveevaluation system, this paper can make a conclusion which iscorresponding equity check-and-balance ownership lead to effectiveinternal control. The conclusion is: relatively distribution and substantialequity checks and balances can bring positive effect on financial,compliance, and strategic target; highly concentrated equity can improvethe aspects of assets and co-operated management; substantial check-and-balance ownership of enterprises about the internal controllevel is better than others without check-and-balance ownership.According to the conclusion of case analyze, this paper proposessome suggestions about strengthening the effectiveness of internal controlin our country, such as reducing major shareholders’ equity, defining the―shareholders’ relationship‖, introducing civil investors to limit thedominated shareholder.