A Study On The Relationship Between The Personal Characteristics Of The Chairman Of The Board Of Listed Companies And The Effectiveness Of Internal Control

After the "Sarbanes-Oxley Act" released, many countries have begun to increase the internal control supervision, unveiled their listed companies to build and evaluate the internal control system of norms or guidelines. The Shanghai Stock Exchange issued the guidelines of Shanghai Stock Exchange listed companies’ internal control, in June 2006. And then, the Shenzhen Stock Exchange issued the guidelines of the Shenzhen Stock Exchange listed companies’ internal control, in September 2006. This indicated that China had entered a new era of listed companies to build a comprehensive internal control system. June 28,2008, five ministries jointly issued the "Chinese version of the Sarbanes-Oxley Act"-"Internal Control Standards", and implemented with effect from July 2009. Related guidelines were released on April 26,2010. After a few years, the study of the internal control is gradually deepening.In China, the Board of Directors has the main responsibility of the internal control system. And chairman of the enterprise is the most important one of senior managers, also is the main leader of the board of directors, which personal characteristics has a very close relationship with the effectiveness of internal control. The study of the relationship also has very practical significance. The personal ability of listed company’s chairman is stronger, construction of companies’ internal control is better, and internal control efficiency will be higher. But now, there are few studies on this aspect.In this paper, we use two methods to research, the normative analysis and empirical analysis. In the normative research, the basic theories were analyzed, such as corporate governance theory, higher-order theories and the heterogeneity of human capital. Then we found that the personal characteristics of chairman are closely linked with the internal control of the company. Meanwhile, domestic and foreign research literatures were reviewed and analyzed. And the research methods, research perspective, the conclusions of literatures were summarized, providing the guidelines direction for this study. Then we theoretically analyze that how the chairman has direct and indirect influence on the internal control. This paper gets the results that the chairman of the board more likely is the main operator of the company, from legal and responsibility perspective. Chairman’s rights in the enterprise have a direct impact on building and maintaining internal control system. In addition, through using the communication skills and interpersonal skills, the chairman of the board effectively reduces conflict between members of the board and improves operational efficiency of the board. This indirectly improves the quality of corporate internal control. Then, the A shares 1924 Listed companies as samples, we evaluate the effectiveness of internal control. And we collect the chairmen’s personal feature information, in six areas of age, gender, tenure, qualifications, professional background, whether overseas or working experience. Next we use empirical research to conduct the correlation analysis, multiple regression analysis. Then we get the conclusion:Listed company chairman’s age, tenure and professional background characteristics are related to the internal control effectiveness. In order to improve the accuracy and comprehensiveness of the study, in this paper we also carried out the regression analyzes between the personal characteristics of chairman and the first class of the target (the strategic goals and business objectives), the second class of target (the reliability of financial information, legal compliance and the assets’ security). The results showed that personal characteristics have different effects on the different targets of internal control.We persuasively elaborate the relevance between the chairman’s personal characteristics and the internal control, through theoretical and empirical study, and make recommendations for improvement of internal control based on the study. However, as to the lack of energy and time, in the paper there are still many deficiencies in the research process. I hope that can be improved in future studies.