Effectiveness Of Internal Control And The Protection Of Small Investors

In recent years, as against the interests of investors frequently reported events, investor interest in all aspects of the protection of more and more attention. Due to the low proportion of institutional investors in China’s capital markets, small and medium investors to become involved in the important subject on the capital markets,"the protection of the legitimate rights and interests with regard to further strengthen the capital market of small investors by the State Council in December23,2013issued by the view "stressed the significance and importance of the protection of small investors, small investors can be expected to protect the future will more and more attention. As the "separation of ownership" in the modern enterprise ownership and management, leading to a conflict of interest between investors and managers, but also due to the small investors compared to the large shareholders reluctant to supervise the manager but to custody entrusted to the major shareholders, the two re-constitute the principal-agent problems affecting interests of small investors "double agent" problem.Our subsequent regulatory authorities in the U.S. SOX Act also unveiled a "basic norms of internal control" and the corresponding "Enterprise Internal Control Guidelines" for the internal control of listed companies in China put forward the construction of the corresponding request. The main purpose of internal control is bound managers to ensure its implementation in order to achieve the business objectives of maximizing the value investor, this paper argues investors achieve maximum value includes both large maximize shareholder value and maximize the value of small investors realize, that achieve the protection of rights and interests of small investors also runs one of the purposes of internal control and effective operation of internal controls to achieve protection of the rights of small investors to some extent. However, existing relevant literature, research scholars are mostly concentrated in the business performance of the enterprise value to earnings management research, internal control, the study of investor protection is basically basically Introduction Research. In this paper, starting from the principal-agent theory, the effectiveness of internal control of listed companies and the protection of rights and interests of small investors directly related research, should have certain theoretical significance and application value.Contents of this paper includes the following six parts:The first part is an introduction, describes the research background and significance, research methods, content and research and innovation; second part of the literature review, scholars from home and abroad for investors protection, the effectiveness of internal controls, to protect small investors and the relationship between the three aspects of internal control effectiveness of the sort and summarize, and made a brief comment; third part is the basis of theoretical analysis and hypothesis of this paper, mainly on the internal the effectiveness of control meaning, significance and importance of the protection of small investors and generate principal-agent theory and the "double agent" problem, and from the "double agent" problems start with small internal control effectiveness analysis between investor protection relationship, then the hypothesis put forward in this paper; fourth part is empirical research, first built a small investor protection index system for this study, then describes the empirical study of data sources, methods and models to establish the definition of variables and, based on descriptive statistics, correlation analysis of the relationship between the effectiveness of internal control and the protection of small investors were multiple regression analysis, and the use of variance inflation factor on the variable autocorrelation analysis of the problem; part five of research conclusions and recommendations on the basis of theoretical analysis and empirical research, summarized conclusions of this study and put forward corresponding policy recommendations, noting deficiencies and limitations of this sub-study.Which, when constructing the index system to protect small investors the right to use the variation in the number of law to construct the index system variables chosen to reflect the small investors indicators; variable selection, this paper Dibo Enterprise Risk Management Ltd. released "Internal control Index of Chinese listed companies’internal control of listed companies as a proxy for effectiveness. Through theoretical analysis and empirical testing, the main conclusions of this paper are:(1) Effective operation of internal controls to achieve the protection of small investors to some extent.(2) Whether in business or in the non-state-owned enterprises, the effectiveness of internal control and protect the interests of small investors showed a significant positive correlation, but the correlation coefficient between the two non-state enterprises to be larger than the correlation coefficient of state-owned enterprises the effectiveness of protection for minority investors the impact of non-state-owned enterprises in the state-owned enterprise internal control is more than obvious.(3) Found that the greatest impact on the protection of small investors is the cash dividend payment, while the proportion of independent directors and a smaller impact on the quality of information disclosure to protect small investors in the construction of the small investor protection index system.