Executive Control Rights, Internal Control And M&A Performance

Since the SOX bill enacted, internal control system has gradually become a hot point in the field of corporate governance. A large number of researches explore the relationship between the internal control system and the listed company’s behavior of financial decisions. However, most studies focused on the impact on the performance of listed companies due to the internal control system. Few research talk about the ultimate ownership of listed company which may affect the effectiveness of internal controls. As well as the impact on the performance of the acquisition company.Due to the capital market of China still immature, the system of market has yet to be optimized and improved, the government departments still play an important role of the financial condition. Most of the state-owned listed company executives is governments assigned, they may not have the necessary expertise level, but the identity of the background and social resources always better than non state-owned listed company, State-owned companies can get more support both in terms of policy and resources than non-state-owned company. Becouse of5,000years traditional influence, feudal hierarchy has been deeply ingrained, which leads executives control excessive expansion of China’s listed company, the board of directors mouth piece phenomenon is particularly serious. Did this condition will result in the different effectiveness of internal control? Whether the M&A performance of listed companies will subject to the internal nature of property rights or the executive control of the company is worth exploring.This paper based on the successful merger samples of Shanghai and Shenzhen listed companies. we collect data of executives, internal control and the related information before and after the merger events. Basis of the distinction on the ultimate ownership of listed companies, explore and empirical analysis the mechanism of interaction between the executive control, internal control and performance. The results show that the excessive concentration of executive control has a negative impact on M&A performance, with respect to non-state-owned holding companies, state-owned holding company shows more negative relationship,the expansion of executive control power restrict the effect of internal control. Respect to non-state-owned companies, state-owned company constraints stronger. To improve the internal control mechanisms of listed companies enhance the performance in mergers and acquisitions. But in the state-owned companies, the internal control does not improve caused by. While in the non-state-owned holding companies, the internal control restraining the damage of M&A performance resulted in power centralization.