The Effect Of Board Characteristics On Internal Control

With a series of scandals, corporate governance and internal control has become a hot research topic in academic circles. Our government established the basic norms of internal control system and promulgated the "Standard for enterprise internal control " and "The supporting guidelines for enterprise internal control " in2008to strengthened the construction of internal control. As the core of corporate governance of the company, the board of directors and executives play a important role in allocating of resources, alleviating the principal-agent problem and enterprising strategic plan. The supervision of internal control as an important part of the corporate governance risk prevention and management of the enterprise provides an effective means. Therefore, the research on the impact of internal control factors and mechanism from the perspective ofthe governance of the board of directors and executive compensation through the establishment of internal control evaluation system in this paper.The research direction was based on the review of the relationship of the characteristics of the board of directors, executive incentive and the internal control. Secondly, through the definition of related concepts and the principal-agent theory, contract theory and resource dependence theory to analysis the governance of the board of directors and the effectiveness of internal control theory. Thirdly, through the board governance and executive incentive and effective internal to constructing the effectiveness evaluation model of internal control and analysis of the underlying assumptions. Then, establish the regression model to evaluate the effectiveness of internal control to test the theoretical hypothesis and the research results and conclusions. Put forward recommendations to improve corporate governance and enhance the effectiveness of internal control through the theoretical basis and empirical results.The sample is a shares motherboard market listing corporation in Shanghai board during the year of2011to2013. The results show that the size of the board of directors, chairman and general manager of the two part-time status and executive incentive measures have significantly influences on the company’s internal control effectiveness, board meeting frequency and the proportion of independent directors and the company does not exist significant correlation on the internal control. In order to improving the level of internal control,we provides some suggestions including the strengthening of independent directors, establish the separation of two staff leadership structure, a reasonable set of meetings of the board of directors and the number of forms, strengthen the executive compensation incentive mechanism of more targeted recommendations. Then, we sums up the shortcomings and prospects.