Internal Control,Exogenous Shocks And Excess Perquisite Consumption Of Executives

In recent years,the opportunistic behavior of senior executive perquisite consumption in Chinese listed companies has been spreading,especially in state-owned enterprises(SOE).The "official and commercial" characteristics of SEO executives have brought about the dual risks of rent-seeking,and the regulation on managerial compensation in SEO have also stimulated the excess perquisite consumption,therefore,the regulation of the executives' perquisite consumption has become one of the difficulties in the reform of SEO.In 2012,the communist party of China issued the "eight provisions",which sounded the horn to combat excess perquisite consumption.In the context of China's "anti-corruption"and "cost cutting",to reduce the excess perquisite consumption of SEO has become an important research topic.The existing literature indicates that excess perquisite consumption is the power rent-seeking behavior of executive,which is generated under the condition of information asymmetry."Putting the power in the cage"is an effective way to limit the abuse of the executive power.Internal control is recognized as an effective institutional arrangement for the restriction of power,which should be used to restrain the excess perquisite consumption of senior executives.However,how about the governance effect of internal control?What is the specific impact path?Will different levels of government control and external environmental change affect the governance effect of internal control?However,there are few studies based on the above problems.Because of this,our paper discusses the relationship between internal control and executive excess perquisite consumption,and examines the influencing mechanism of them,based on the data of Shanghai and Shenzhen A-share state-owned listed companies from 2010 to 2016.It also considers the horizontal and vertical adjustment factors,and examines the influence of government control level and the publication of "eight provisions" on the relationship between internal control and executive excess perquisite consumption.The results show that higher quality of internal control significantly reduces the excess perquisite consumption of SEO.Moreover,this governance function of internal control mainly exists in the central SEOs and is more pronounced after the implementation of the "eight provisions".The additional test finds that governance function of internal control on excess perquisite consumption is realized by restricting the power of managers.This paper confirms the positive effect of internal control on executive excess perquisite consumption,and reveals the complementary relationship between external policy and internal control in the governance of executive corruption.Therefore,the synergistic effect of internal and external governance mechanism should be fully played in the anti-corruption process of SOE.This study is helpful to deepen the understanding of the economic consequences of internal control and the influence factors of executive excess perquisite consumption,providing empirical evidence for the effectiveness of the internal control practice in China,and it also provides theoretical and empirical support for the anti-corruption practice of "To put power into the cage".