A Study Of The Influence Of Ownership Structure Of Coal Listed Companies On The Effectiveness Of Internal Control

Since2008, with the “Basic Standards for Enterprise Internal Control” and“Enterprise Internal Control Guidelines” promulgated, the community increasinglyconcerned about internal controls. In the environment of rapid economic developmentand the ever-changing market, internal control has become an important means ofenterprise risk prevention. Effective internal controls can plug the loopholes in businessmanagement, avoid the occurrence of errors and fraud, and enhance the competitivenessof enterprises, for achieve business goals escort. So how scientific and objectiveevaluation of the effectiveness of internal control and what are the factors that will affectthe effectiveness of internal control has become a hot topic of academic research.Previous studies show that corporate governance will affect the effectiveness of internalcontrol, but the conclusions are not uniform. Ownership structure as a basic for corporategovernance system of property rights, and will also affect the effectiveness of internalcontrol through governance mechanisms. Because of different industries, shareholdingstructure will show different characteristics, and the coal industry as one of the basicenergy industry plays a very important role in the whole process of economicdevelopment, So the paper select the coal industry as a research object, and depthshareholding structure of listed companies on the impact of the effectiveness of internalcontrols. The article focuses on ownership concentration and equity balances the impacton the effectiveness of internal control, the state-owned shares and legal person shares ofthe impact on the effectiveness of internal control.The paper is divided in two parts theoretical and empirical. In the theoretical part,the article first elaborates the meaning and classification of shareholding structure, themeaning and evaluation methods of the internal control effectiveness. Secondly,expounded the principal-agent theory and signaling theory, agency relationship appearsmoral hazard and opportunistic behavior is not conducive to the effective implementationof internal control, based on signaling theory, the more effective internal controls have anincentive to disclose more information about the internal control. Finally, the theoreticalanalysis of the ownership structure will produce what kind of impact the effectiveness of internal control. Next, combined with data to analyze the current situation of China’s coalindustry five years’ shareholding structure and internal controls. In the empirical part, thepaper selects the2008-2012A listed39coal industry listing corporation as the object ofstudy, proposed the ownership structure influences the effectiveness of the internalcontrol of the4hypothesis, selects to measure the effectiveness of internal control fromthe degree of realization of objectives of internal control, internal control objectivesincluding the realization of efficiency, reliability of financial reporting and compliancewith relevant laws and regulations, and establishes three regression models. Theempirical results show that: ownership concentration and the corporate performance is asignificant positive correlation; equity balance degree has a significant positivecorrelation to the reliability of financial reporting and compliance with laws andregulations; the proportion of state-owned shares and compliance with laws andregulations is a significant negative correlation; the proportion of corporate shares andcompliance with laws and regulations is a significant negative correlation.The article puts forward policy recommendations according to the empirical studyconclusion. The policy is about two aspects: internal control itself and the ownershipstructure.1. To improve the understanding of internal control and strengthen theconstruction of internal control. The company should establish perfect rules andregulations; the outside should improve the supervision mechanism.2. Optimize thecompany ownership structure. Company should adjust the percentage of each main body,to improve the mechanism of mutual supervision and mutual balances betweenshareholders while maintaining the proper ownership concentration and decrease theproportion of state-owned shares.Through the combined method of the normative research and empirical analysis ofthe coal industry impact of ownership structure on the effectiveness of internal control,and for the conclusion of the study has offered the suggestion of perfecting internalcontrol, help to improve the effectiveness of internal control of the coal industry, has acertain practical significance. At the same time, the author hopes this paper can providereference for other industries’study.