Academic Background Independent Directors And The Effectiveness Of Internal Control

Independent directors have the functions of supervision and consultation.To supervise the management and major shareholders,to protect the interests of investors is the primary responsibility of independent directors,and the use of their own intelligence,relations to provide resource support for enterprises play the role of independent directors advisory.Since the independent director system was introduced into China,the efficiency of the function of independent directors has been controversial.The independent director at the end of 2015 set off to leave the tide more independent directors especially from the universities of independent directors groups be pushed in the teeth of the storm.The role of independent directors is again questioned by academics and practitioners.As the highest control subject of the internal control,Independent directors are very important for the construction and implementation of internal control.This paper attempts to study the performance of the functions of independent directors from the perspective of internal control in combination with the special situation of China.According to the "reputation theory",if independent directors cannot supervise the internal control of the enterprise,once the internal control defects,enterprises because of false reports,embezzlement of assets and other illegal acts face the condemnation of the commission or the exchange,independent directors will be questioned without due diligence in performing their duties.Therefore,in order to maintain its own reputation,the independent directors will be responsible to supervise the internal control of the enterprise,while the independent director of academic background for their professional quality is more able to actively play a supervisory role.However,the independent directors with administrative background may play a supervisory role in maintaining the reputation of the university,may also more play advisory functions because of providing "proper political capital" support for the development of enterprises,thus ignoring the function of supervision.This article This paper tests the hiring of independent directors of university academic background especially the independent director with administrative background whether and how to build an effective internal control effect from the perspective of internal control.This paper takes the listed company with internal control auditing from 2008 to 2014 as the sample,and the preliminary empirical test results show that:(1)The independent director with the academic background appointed by the listed company has the promotion function to the internal control effectiveness.Specifically,The independent director with the academic background improve the operational level of internal control quality rather than the design level;compared to the internal control of financial level,the independent director with the academic background of universities are more likely to have a positive impact on the internal control of non financial report;the more conscientious independent director with the academic background is,the higher the quality of internal control will be.(2)The appointment of independent directors from colleges and universities with administrative background has a negative effect on the quality of internal control: the more college independent director with administrative background is appointed,the lower the effectiveness of internal control will be;the higher the independent director of the administrative level is,the worse the quality of internal control will be.Further tests found that independent directors from colleges and universities with administrative background may be partly to blame for the low effectiveness of the internal control because of their negative attitudes.