Research About The Impact Of Corporate Governance On Internal Control Deficiencies

In this paper,56 private listed companies in the area of Sunan which listed in small and medium enterprise board are selected as the research object,and totally get 280 samples of valid observations from year 2011 to 2015.this paper examines the effect of corporate governance on internal control deficiencies under specific historical and cultural background.Firstly,this paper defines the concepts of corporate governance and internal control deficiencies,refering to literatures about corporate governance,internal control deficiencies as well as the relationship between them,and then explains the effect mechanism of corporate governance on internal control deficiencies based on the principal-agent theory and asymmetric-information theory.Sencondly,this paper introduces the social cultural background and development history to explore the corporate governance characteristics and internal control situation of Sunan private listed companies.Lastly,based on the characteristics of these companies,this paper analyzes the influence of corporate governanceon internal control deficiencies from four main aspects including ownership structure,board of directors,board of supervisors and executives,and proposes hypotheses.Thirdly,by menthod of binary logistic analysis,this paper tests these hypotheses and offers proposals.Main conclusions of this research are as follows: In the aspect of the corporate governance of the Sunan private listed companies,this research finds that ownership concentration is high,duality of CEO and chairman is common,the chairman has political background and equity incentive is a lack;In the aspect of internal control,it is find that internal governance environment is weak with strong family context,professional managers is not respected and the internal control report is a mere formality;As to the relationship between the twe,this paper finds that,the centrality of equity,shareholding of institutional investors,financial independent directors proportion and executive stock options have negative effect on internal control deficiencies,Board size has a positive effect on internal control deficiencies;duality of CEO and chairman,the chairman has political background,Executive compensation have no significant effect on internal control deficiencies.