Internal Control,Disclosure Quality And Excess Perks

During recent years,the perks of the executives has been on the rise,frequently challenging people's bottom line.As a creative way of corruption,the perks have gained great popularity among the listed companies where many scandals concerning pricey perks have been exposed to the public.The perks,variant in amount and forms,not only pose a thereat to the development of the enterprises,but also become a tremendous hazard to both the country and the society,which makes it really urgent to prevent and control them.Shortly after Enron Scandal in the late 2001,the American Congress introduced the Sarbanes-Oxley Act which emphasizes the importance of the intern control,and the provision 404 required that the list companies should disclose the information of the internal control over financial reporting and present a internal control report which shall be audited by the external auditors.The Basic Norms of Internal Control in 2008 and Guidelines for the Internal Control of Enterprises in 2010 marked the preliminary completion of the internal control system with Chinese characteristics.Internal control,aiming to ensure the legal compliance of business management,could prevent and control ill behaviors done to the enterprises,such as the excess perks of the executives.This paper selects the A-share companies listed in Shenzhen Stock Exchange from 2010 to 2015 as the research samples,and the final sample volume after the sample selection is 6763.Taking the internal control as the starting point,by means of theoretical analysis and empirical test,the paper analyzes the inhibitory effect of internal control on excess perks and studies the different inhibitory effects of internal control between the state-owned enterprises and non-state enterprises.Furthermore,adding information disclosure quality as the adjustment variable,this paper analyzes the influence of information disclosure quality on the inhibitory effect of internal control on excess perks and studies the different influence of information disclosure quality on the inhibitory effect of internal control.After the empirical test,the following conclusions can be come into: First,internal control quality is negatively correlated with excess perks i.e.the higher the internal control quality is,the lower the perks of executives are;secondly,compared with the state-owned enterprises,the inhibitory effect of internal control on excess perks in the non-state enterprises is more obvious;thirdly,the quality of information disclosure can enhance the inhibitory effect of the internal control on excess perks,i.e.as information disclosure quality improves,the inhibitory effect of internal control on excess perks will be strengthened;fourthly,compared with the state-owned enterprises,the influence of information disclosure quality on the inhibitory effect of internal control on excess perks is more obvious,i.e.as the quality of information disclosure changes,the enhancement effect of the inhibitory effect of internal control on excess perks is more obvious.This paper shows that the construction of the internal control system is closely related to the perks of the executives,and that the construction of the information disclosure system will affect the relationship between the internal control construction and the perks of the executives,and that there is a big difference between the situation of the state-owned enterprises and the non-state enterprises.Therefore,the relatively perfect internal control system and information disclosure system can help prevent and control the excess perks of the executives,especially for non-state enterprises.However,when it comes to the state-owned enterprises,internal control system,information disclosure system and other external supervision mechanism should be combined to prevent and control the excess perks in a better way.Unlike the existing studies which selects the perks as the object of the research,this paper takes the excess perks as the foothold,i.e.the part of perks beyond the actual needs of the operations of the companies or the abnormal part,discusses the prevention and control of excess perks from both the internal control quality and the information disclosure quality,which broadens our study horizon of the the prevention and control of excess perks,and provides an empirical basis for the study as well as the prevention and control of excess perks.