Study On The Influence Of Internal Control Quality To Executive Compensation Under The Life Cycle Perspective

Experienced more than ten years of development,internal control in China has been gradually improved.From the five elements of internal control(control environment,risk assessment,control activities,information and communication,monitoring),every aspect of internal control has a great impact on the business activities of enterprises.As a high-quality operating performance,internal control has been recognized by industry professionals,and the relevant regulatory authorities have also imposed more and more strict control on internal control.As the existence of principal-agent relationship,executive group plays a pivotal role in the enterprise.As the highest leaders of enterprises,they determine the strategic development of enterprises,and also determine the survival of the enterprise.And the most relevant interests of executives are their compensation,the level of compensation represents the business performance of executives,and also a manifestation of their own ability.In addition,the life cycle theory think that different life cycle of the enterprise has a different structure and characteristics,and also faces different risks and opportunities.Therefore,the situation of the internal control is different,and the executive compensation linked to business performance will be different.So how internal control quality influences executive compensation under different life cycles? What measures should the enterprise take to ensure the rationality of executive compensation?Therefore,this paper uses the method of empirical analysis,analyzes the impact of internal control quality on executive compensation under different life cycle based on the data of Shanghai A-share listed companies from 2013 to 2015.The results confirm that the quality of internal control has a significant positive correlation with executive compensation,and in different life cycle of the enterprise,the internal control quality of the impact of executive compensation is different.The results of this study confirm that the assumptions presented in this paper fully illustrate the factors that include the internal control in executive compensation.Therefore,enterprises should pay attention to scientific and rationality in the development of executive pay.On the one hand,they should consider the internal control as a non-financial factors on the impact of executive compensation,and in different circumstances to develop different circumstances of the pay system,so that the rationality of the pay system can better motivate the executives,and bring greater benefits to the enterprise,and also can play a better role of corporate governance of internal control.