Research On Political Affiliation,CEO Incentives And Internal Control Effectiveness

The major purposes of internal control is to ensure the safety of the enterprise funds,to promote the scientific operations and to promote healthy development of enterprises under the low risk of enterprise.For this reason,various countries have issued relevant guidance on internal control,such as the Sarbanes act in the United States,the basic norms of internal control of enterprises in China and so on.Governments attach great importance to the internal control of enterprise.However,there are a series of problems such as financial fraud in our country every year,which brings bad influence to the society,and the root of it is the internal control of many enterprises in the form.Therefore,if we want to improve the effectiveness of the internal control,it is necessary to study the internal control is affected by what factors.Although the internal control system is full participation,but in practice,the senior management take the lead and control role,especially the CEO.The existing literature has been studied on the joining together of two post CEO,the age of CEO,the background of CEO and so on,but the CEO incentive mechanism is slightly less.In particular,the influence of CEO motivation on the effectiveness of internal control is considered.The information disclosure is a comprehensive way of internal control.And so the quality of internal control is based on the disclosure of internal control information.This paper uses the Dibo internal control information disclosure index to measure the quality of internal control.This paper chooses the companies listed in Shanghai and Shenzhen from 2012 to 2016 to study the CEO's monetary compensation incentive and equity incentive effects on internal control effectiveness,and to distinguish the CEO political association,CEO's monetary compensation incentive for the influence of the internal control effectiveness and CEO's equity incentive effects on internal control effectiveness,in order to determine reasonable CEO incentive mechanism,thus reducing the agency cost of the enterprise,makes the CEO's goal is consistent with the goal of enterprise,is conducive to the effective implementation of internal control.First of all,the article adopts the method of theoretical analysis,based on agency theory,the optimal contract theory,incentive theory,the three theories,and combining with the related theory of internal control,CEO's monetary compensation incentive and equity incentive effect on the effectiveness of the internal control mechanism,and then put forward in this paper,the hypothesis.Secondly,the empirical analysis method is used to collect data,construct the model,and construct descriptive statistical analysis,correlation analysis and regression analysis.Finally,this article's conclusion,namely the CEO equity incentive effectiveness of internal control has positive effect,the political association of CEO equity incentives and positive relationship between internal control effectiveness has inhibitory effect,and the CEO's salary incentive effect on internal control effectiveness was not significant.The empirical result shows that the long-term incentive mechanism to improve the internal control effectiveness,this is due to the implementation of equity incentive can be a certain residual claims are assigned to the CEO,shareholders and the operators can enjoy the rest of the distribution,so that the interests of the CEO convergence with the interests of the shareholders,to achieve the purpose of reduce agency cost,effective internal control.Therefore,in formulating the incentive mechanism,we should first consider whether the CEO has a political background and then take appropriate equity incentive mechanism to improve the internal control effectiveness of the enterprise.The innovation of this paper lies in the innovation of the research perspective.In the past,the influence of CEO motivation on the effectiveness of internal control was only examined,and the political background of the CEO was rarely taken into account.This paper empirically tests the influence of CEO motivation on the effectiveness of internal control from the perspective of CEO's political relevance.