Internal Control Deficiencies, Corporate Governance And Financial Distress – Evidence Of Listed Company In 2011- 2015 From China

On China’s securities market, the number of financially troubled companies showed an increasing trend, which cause serious consequences to all sides. Therefore, to improve the financial situation of listed companiesand to research the influencing factor of plight is not only a theory needs, but also a real need. The more important part of modern business management is internal control, which also played a very important role in avoiding financial distress. Good corporate governance structures can improve the company’s operating capacity. What’s more, the financial situation will be relatively healthy.However, weakening corporate governance structure tends to affect the operation of the company as well asto cause the company’s financial deterioration, or even to make a company in financial difficulties.Therefore corporate governance situation plays a vital part on competitiveness and stability of the companies. A sound internal control system, and good corporate governance structure could prevent the companies from financial risks or financial trouble, in order to ultimately realize the business objectives and health management. As modern enterprise management tools, a sound internal control systemhas been widespreadly concern, and put into practical use. It has a very important significance on how to effectively prevent and control financial risks and to avoid financial trouble for many listed companies and shareholders, and even the entire market.Based on the previous studies,the concept of internal control deficiencies, corporate governance and financial distress have been clearly defined in this acticle, and the company’s governance structure is divided into three parts---the ownership structure, the board features, characteristics of senior executives. What’s more, the relationship of internal control deficiencies with financial difficulties,the relationship of corporate governance structure with financial difficulties, as well as the mutual effection of internal control deficiencies, corporate governance structure and financial distress has been all analyzed in order to verify whether the integrated enterprise internal control and corporate governance structureplayed a significant role to avoid financial difficulties. After making concept definition and theoretical analysis, the selected sample was tested in empirical method, and internal defects, the relation of the governance structure between financial distress were also analyzed in the article.According to the final results of the analysis, the writer puts forward some suggestions toperfect the internal control system of listed companies, strengthen governance structure, improve level of governance in the view of avoiding financial distress.