Research On The Influence Of The Concept Of Management Risk To The Effectiveness Of Internal Control Under Life Cycle Perspective

Internal control is very important in the enterprise management. It is a management mechanism to help enterprise to improve management level and operational efficiency, to protect the property security and enhance competition power, to reduce the management risk and guard against abuse, as well as protect the interests of the investors. At present, according to the laws of the organizational development, we divid the enterprise life cycle into three phase method: the growth period, mature period, and decline period. This is a widely shared in the theoretical circle. Enterprises in different growth stage presents different operating patterns. For the different stages of enterprise development, the managers need to set up a correct concept of risk management to ensure the internal control effectiveness. In this paper, we will put the enterprise life cycle, the management risk preference and the internal control effectiveness together. In order to study the relativity between management risk preference and the effectiveness of internal control based on the different enterprises life cycle, and then puts forward reasonable executive risk management strategy according to the characteristics of the enterprise at different stages.This article mainly choose 2012-2014 China A-share manufacturing listed companies,1067 listed companies as samples, using the enterprise life cycle theory, the ma-nagement risk preference theory, the internal control theory and multiple regression analysis method. It studies how the management risk preference impact on internal control effectiveness based on the different life cycle of enterprise. The study found that: under the condition of all samples, appetite for risk management and internal control effectiveness was significantly negative correlation. Further, the growth mana-gement risk preference the negative influence to the internal control effectiveness is greater than the mature stage, and the recession management impact on the effectiveness of internal control and risk preference is greater than the mature stage. For this, we put forward the following suggestions: first, managers must set up the manage-ment concept of internal control, improve the recognition of the importance of internal control, so as to ensure that the internal control supervision and standardizethe function of the play. Secondly, in terms of the conclusion of this paper, the management risk appetite is one of the factors that affect the effectiveness of internal control.in different stages of development of the enterprise, management according to its stage characteristics to establishing reasonable enterprise development strategy. In growth period, management should control the market risk and operational risk and can’t touch the internal control system constraints. When the enterprises develop into the mature period, the enterprise should not only insure the original market share, but also catch the right time to develop new markets. This requires managers to treat various kinds of investment risk correctly, In planning as well as to develop all kinds of risk early warning mechanism. When companies enter recession, managers should keep a clear understanding on the surrounding environment, grasp the opportunity to bring enterprise turnaround to recycle the enterprise life cycle.