Research On The Influence Of Managerial Power On The Effectiveness Of Internal Control In State Owned Enterprises

Recent years see more and more news about executives from state-owned enterprise put into prison,which arises hot discussion about the executive power and corruption issues.In addition,according to " white book on internal control of Chinese listed companies in 2016",the proportion of major deficiencies on internal control has been rising from 0.16% in 2011 to 1.54% in 2015.In view of this serious problem,this paper focus on the possible relationship between the executive power of state-owned enterprises and the effectiveness of internal control.There are two different effects after shareholders give certain power to executives: the value creation effect and the benefit output effect.How to balance the two effects by the executives will be affected by their power intensity and the corresponding mechanism of the corporate governance.In this paper,the author reviews the research literature of executive power and internal control,and combs some of the existing research results.Based on the theoretical support of principal-agent theory,housekeeper theory and incomplete contract theory,the analysis of the relationship between the power of authority and the effectiveness of internal control is given.Then,the relevant hypothesis is put forward around the research goal,and the relationship between executive power and the effectiveness of internal control is verified by principal component analysis,multiple regression method and interactive method.At the same time,the relationship between the variables of the state-owned enterprises and the private enterprises is compared.Conclusions are as follows:(1)The bigger the executive power,more effective the internal control.(2)Compared to private enterprises,the relationship between the executive power and the effectiveness of internal control is stronger in state-owned enterprises.(3)The higher degree of ownership concentration can significantly lower the positive influence between the effectiveness of the internal control and the executive power.(4)Compared to private enterprises,the increase of ownership concentration of state-owned enterprises has no significant inhibitory effect on the relationship between the executive power and the internal control.Finally,this paper puts forward some policy suggestions from three aspects: executive power,internal control and corporate governance.This paper validates the positive correlation between executive power and the effectiveness of internal control through the empirical data of A-share listed companies.This relationship is validated in the whole sample,state-owned enterprise sample and private enterprise sample,which provides a research support for the "value creation effect" of executive power to a certain extent.In addition,through establishing the interaction variable between the executive power and ownership concentration,we find there is a positive effect of equity balances on the relationship between executive power and internal control and thus provide some useful reference for the rational allocation of executive power,the improvement of ownership structure and the corporate governance mechanism.