Research On The Impaction Of Corporate Governance To Internal Control Deficiencies

With many companys broke out cases of business failure or financial scandal, as a result of the failure of internal controls, our policy and academia has begun to realize the critical role of the internal control. Ministry of Finance, Audit, CBRC, CSRC and CIRC has promulgated the 《basic norms of internal control》 in 2008,requireing that companys should publish the defect information in the internal control self-assessment report. And mandatory requirements that all of our motherboards companies must disclose the self-assessment report in 《Enterprise Internal Control Guidelines》 publiced in 2010, and 2012 started. With the self-assessment report of mandatory disclosure, our scholars began to focus on the Internal control deficiencies. In recent years, making some achievements in the field of internal control deficiencies affecting factors, But few scholars research on the remediation effect of internal control deficiencies. So this article observed from the behavior of corporate governance, research that how corporate governance effect the remediation effect of internal control deficiencies, from shareholders, the board of directors, board of supervisors and managers.This article focus on the remediation effect of internal control deficiencies. Articles structure can be divided into theoretical and empirical. The theoretical part firstly includes the literature review on Internal control deficiencies identified methods,and the effect of corporate governance to internal control deficiencies. Then the theoretical part introduce some theoretical foundation,based on the same premise、purpose、relationship and Impact mechanism of corporate governance with internal control deficiencies. Based on the theoretical part, empirical part also made the following two aspects:(1)According to the signs of internal control deficiencies published on 《Internal Control Audit Guidelines》, Select 197 companies with internal control deficiencies in 2010. Using simple statistical methods to analysis this companies’ fundamental characteristics, Using the paired samples T-test method to analysis this companies’ corporate governance characteristics. The results show that: In the company existsd significant internal control deficiencies, The number of shareholders’ meeting、Board size、Board shareholding proportion、Scale of audit committee、Independence of audit committee and shareholding proportion of the Supervisory Committee,are significantly higher than the normal company; Board size 、 the size of the Supervisory Board and executive’s compensation,are significantly lower than the normal company.(2) The thesis use 197 companies as samples, Collectting corporate governance index in 2010、2011、2012、2013, and quantification internal control deficiencies using scoring method. By using multiple linear regression model, research that after exposuring significant internal control deficiencies, how corporate governance effect the remediation effect of internal control deficiencies. The empirical results show ownership Concentration、Board size、The proportion of independent directors、The number of supervisory board meeting、the Board of Supervisors stake、executive’s compensation are significant positive correlation with the remediation effect of internal control deficiencies. The number of board meetings and the Board of Supervisors scale are significant negative correlation with the remediation effect of internal control deficiencies.