Background Characteristics Of Managers And Internal Control Quality: A Research On Chinese Listed Company

In recent years, lots of financial fraud cases were appeared in our country capital market,so a larger number of inventors have lost a huge amount of money. And the effective internalcontrol can prevent the financial fraud and avoid the risk, so lots of people pay attention to theinteral control. What’s more, our state has enacted some laws and regulations to strengthen theinternal control of enterprises. Building the good internal control is depending on the enterprisemanagers. Actually, the background characteristics of managers can directly reflect cognitiveabilities and values, thereby affecting manager’s behavior and decision-making. So this paperbased on the upper echelons theory, team theory, agency theory, stakeholder theory, study therelationship between background characteristics of managers and internal control. Because thechairman is the most important member to the company, so managers would be devided into themanagement teams and the chairman, and researching dependently. We consider China specialbackground system, this paper distinguishs between the different nature of property rights ofenterprises to study the relationship between background characteristics of managers and internalcontrol deeply.Based on the data of Shenzhen and Shanghai A-share listed companies from2008to2012,study the relationship between background characteristics of managers and internal control. Theempirical regression results show that: Firstly, the bigger management teams, the greater theaverage age, the higher the average degree, the higher the quality of internal control ofenterprises. Secondly, the chairman of the older, the longer the term, the higher degree andhaving the part-time job in other company, the higher the quality of internal control ofenterprises. At last, in order to study their relationship deeply, the sample would be devided intothe state-controlled enterprises and non state-controlled enterprises, the result shows that thebackground characteristics of managers (management team and chairman) have significantdifferences in the internal control. Based on the conclusion of this study, this paper gives someproposals and suggestions, so it can give some enlightenment about personel selection andoptimization of enterprise property rights system.