An Empirical Analysis Of The Internal Control And Corporate Executive Compensation Incentive

The main goal of the implementation of internal control is to improve the operational efficiency of enterprises, to ensure the legitimate business management, to achieve the strategic objectives of sustainable development of enterprises. In order to achieve the above objectives, executives are required to maintain a consistent with the interests of shareholders. Constraints management of the adverse selection and moral hazard, this is precisely the problem of salary incentive mechanism. Because the internal control system of our country starts late, the theory is not perfect. Whether the internal control of scientific norms can improve the sensitivity of pay performance, this has been a heated discussion. Prior to the scholars with the company’s performance and executive pay incentives linked to verify the effectiveness of the positive correlation. But the performance of the enterprise reflects the overall effectiveness of the management system, representing the financial factors, not considered to be more fully representative of the internal control of non financial factors. If you can prove that the listing Corporation’s internal control is better, the effect of executive compensation incentive is more obvious. So in practice, the enterprise can strengthen the internal control system construction. In order to effectively implement the compensation incentive mechanism, the incentive effect of executive compensation. Improve the performance of the company; complete the development goals of the company. So, enterprises will have more confidence, promote the construction and implementation of internal control system, and promote the improvement and development of enterprise internal control system. At the same time, it also provides a new idea for the development of the compensation incentive system.The author reviews the domestic and foreign relevant theoretical literature. On the basis of agency theory, optimal compensation contract theory, incentive mechanism and so on. Four research hypotheses about the relationship between internal control and executive compensation are put forward. According to the internal control evaluation system constructed by the selected internal control variables, the internal control index is calculated. In view of executive pay incentives, select Shanghai, Shenzhen Stock Exchange announced, the total number of senior management compensation paid by the total number of the natural logarithm of the total three. In the cash flow statement notes, the natural logarithm of the cash expenditures related to the operating activities is measured in the form of cash flow statement. Construct multiple regression models. From 2012 to 2014 in Shanghai and Shenzhen A shares of Listed Companies in the data as a sample of the study. And combined with China’s national conditions, according to the nature of the enterprise, the sample enterprises are divided into state-owned and non state-owned enterprises. This empirical analysis uses statal4 software. The effect of internal control on executive compensation is tested under different enterprise characteristics. This paper studies the different nature of the enterprise internal control management and executive compensation incentive mode choice, has certain reference and reference value.Research findings show that:(1) there is a positive correlation between the internal control and incentive mechanism of high quality. Including:the internal control and explicit and implicit compensation incentive mechanism has a positive correlation. (2) other factors unchanged, compared with the state-owned enterprises, the internal control of non state owned enterprises and the positive correlation is more significant. (3) Compared to the non state owned enterprises, the positive correlation between the internal control of the state-owned enterprises and the executive compensation incentive is more significant than the other factors.