Research On The Influence Factors Of Manufacturing–listed Companies' Effectiveness Of Internal Control

In recent years,as the internationalization and globalization process of capital market speeds up,China's economy has gained a relatively fast development.However,misconducts,including corporate financial fraud,cheating the public and damaging the interests of investors,also occur occasionally.In the last few years,there emerged a number of scandals in China,such as the “Poisonous Milk Powder” of Sanlu,“Cold Water Mass” of Zoneco Seafood and dishonest practice incident in space communication,which were evidently in divergence with the aims of internal control.It raises doubts and reflection upon the effectiveness of intern control(IC).How to improve the effectiveness of IC has become one of the significant issues that listed companies now must face.Targeting at the failure of IC,China has issued The Basic Norms of Corporate Internal Control in 2008,providing institutional support for enhancing the efficacy of corporate internal control.Studying factors that influence IC effectiveness is conducive for China's listed companies to promote their IC validity,improve their operational and managerial level and boost their business performance.Moreover,it also has tremendous practical significance for ensuring the information quality of corporate financial reports and protecting the lawful interests of investors.The article selects the Chinese manufacturing enterprises that account for more than40% of China's GDP on a long-term basis as research targets,conducts literature review on the arguments of the assessment of corporate IC effectiveness and factors influencing IC effectiveness from both Chinese and international scholars,and provides detailed theoretical illustration for the concepts,aims,and essential components of IC and the content and principles of IC effectiveness.Based on the above theoretical analysis,statistical analysis is made regarding the status-quo of the manufacturing enterprises listed on A-Shares.The article chooses Chinese manufacturing enterprises listed on Shanghai Stock Exchange and the Shenzhen Stock Exchange from 2011 to 2015 as sample and conducts empirical analysis of level measures and influencing factors of the IC effectiveness of those manufacturingenterprises listed on Shanghai Stock Exchange and the Shenzhen Stock Exchange.The results show that equity concentration,equity restriction ratio,the size of supervisor board,disclosure of risk notifications and plans,disclosure of IC responsibility arrangement from the board of directors,disclosure of safe production conditions,setting-up of auditing committees and listed years are positively related to corporate IC effectiveness of those manufacturing enterprises,while the ratio of independent directors,the size of the board of directors,and disclosure of IC assessment reports,IC auditing reports,IC flaws rectification and evaluation factors of performance assessment are not significantly related to corporate IC effectiveness of those manufacturing enterprises.According to the empirical outcomes,the article proposes several suggestions,including strengthening equity restriction and balancing,improving corporate governance mechanism,enhancing the quality of information disclosure,increasing risk awareness,lifting transparency of IC responsibility arrangement and paying higher attention to the importance of auditing committees.