Effects Of Equity Incentive On The Internal Control Effectiveness

With the rules related to internal control promulgated and more attention paid to internal control in recent years, research on internal control has increased gradually at the same time. But few scholars take equity incentive into account when study internal control. This paper focuses on the equity incentive, analyzing the effect of equity incentive on the internal control effectiveness.This paper measures the internal control effectiveness with the realizing of internal control goals and analyses equity incentive’s impact on internal control effectiveness with the independent sample T test, paired samples T test and multi-variable linear regression analysis methods. The main conclusions are as follows:Compared to listed companies with no implementation of equity incentive, the listed companies carried out equity incentive are more positive in operating management’s legality and operating efficiency. And safety of assets also improved obviously after equity incentive’s implement.As to the effects of equity incentive on the internal control effectiveness, the level of equity incentive has significantly negative impact on operating management’s legality but positive impact on operating efficiency. The duration of equity incentive is positively correlated with the safety of assets but negatively correlated with the reality and integrality of financial reports. The listed companies whose incentive object includes supervisors performed better on operating management’s legality, safety of assets and operating efficiency than those without supervisors, but worse on the reality and complete of financial reports.