The Influence Of The Corporate Governance Structure To The Internal Control Effectiveness

At present, China’s economy has entered into a period of rapid growth, but the vast majority of corporate governance can’t keep up with the pace of economic development, company’s internal control ability is significantly lower than the actual needs, the effectiveness of internal control is difficult to make people satisfied.How to improve the corporate governance structure to play the role of internal control to the largest extent, let the enterprise can reduce the business risk in the fierce market competition, this is also the focus of the social concern.Early in2010, the ministry of finance and other four ministries issued "Supporting Guidelines For Enterprise Internal Control", which involved application guidance, evaluation guidance, and audit guidance in order to improve the level of internal control, enhance the scientificalness and accuracy of financial information.The introduction of "basic norms of internal control"and "Supporting Guidelines For Enterprise Internal Control" constitute China’s perfect internal control standard system,which also shows that internal control is becoming more and more important for the enterprise management.However, domestic researches on the internal control only have a short time, although it has absorbed a large number of western advanced theory of internal control, however domestic companies still haven’t established a sound internal control system due to the disjoint of theory and practice.In addition, with the successful operation of first28listed companies in China,the Growth Enterprises Market officially open board in October23th2009finally. So far, empirical researches on the GEM enterprises are mainly concentrated in the stock option and IPO pricing,and empirical researches on internal control and corporate governance structure which are prominent on GEM is seldom.Based on the above reasons,This paper selects GEM listed companies as samples,using empirical research methods to study the various aspects of corporate governance factors on the effectiveness of internal control.The paper’s frame structure is as follows:The first chapter is introduction section.First,the paper mainly describes the corporate governance structure on the effectiveness of internal control background,meaning,and the review the research results at home and abroad;Second,the paper points out the proposed method of research ideas and research methods.The second chapter is the theoretical analysis.First, the related concepts of corporate governance and internal control are defined,and the theories of the research are based on the incomplete contracting theory, principal-agent theory and signaling theory.The third chapter is the analysis of relationship between internal control and corporate governance structure.First,the paper introduces the growth enterprise market,and the characteristics of the GEM companies;Second,the paper discusses the relationship and distinction between corporate governance structure and internal control, finally, the paper analyzes the mechanism which corporate governance structure impacts the effectiveness of internal control.The fourth chapter is theory analysis and the formation of the specific research hypotheses.The paper put forward the specific research hypotheses from four aspects of shareholders,the board of directors,board of supervisors and managers to discuss their effects on internal control effectiveness.The fifth chapter is the empirical research component.This part contains sample selection,variables selection and assignment and the empirical research method. The article chooses the data of GEM listed companies from2010-2012, using descriptive statistics multiple linear model and regression testing to verify the proposed hypotheses.The sixth chapter is the research conclusions and policy recommendations.The empirical results in the previous section, based on the corporate governance structure influence the effectiveness of internal control and the corresponding improvement measures and policy recommendations. Policy recommendations contain optimizing equity structure, and improving the board mechanism,paying attention to the use of specialized commissions supervision and the supervisory role of the board of supervisors and optimizing the incentive system of managers.