Research On The Influence Of Top Management Team Heterogeneity On Internal Control Effectiveness

In recent years,the financial fraud cases of listed companies in our country have occurred frequently,which has led to large-scale changes in the company's internal senior management team.This not only has caused serious obstacles to the development of the company itself,but also caused damage to the economic interests of investors.In response,the China Securities Regulatory Commission has issued a series of policies to carry out all-round supervision over the establishment of the internal control system of the company.It requires listed companies to improve their internal control system and disclose internal control reports in order to avoid the associated risks.On the other hand,with the continuous advancement of internal reforms,companies are increasingly concerned about the improvement of their internal control system.Senior executives,as the main body of internal control,have great differences in their academic background,cognitive ability,and values.In addition,under the socialist market economic system in China,companies under different property rights systems select senior executives.There are certain differences in the methods of personnel.These differences will directly affect the formulation of internal control strategies and the efficiency of implementation of internal controls.The influence of the heterogeneity of the senior management team on the quality of internal control has become a hot topic for scholars at home and abroad.Therefore,this article combines the nature of the property rights of the company,discusses the influence of the heterogeneity of the senior management team on the effectiveness of the company's internal control,and provides relevant suggestions for the optimization of the senior management team.This article reviews the research history of domestic and foreign scholars on the heterogeneity of the senior management team and internal control theory literature,and defines the selection scope of the senior management team.At the same time,the use of high-level theory,principal-agent theory,team theory,human capital theory,and corporate governance differences under different property rights systems as theoretical support,and then put forward the research hypothesis and empirical test.In the empirical analysis stage,the internal control data of all A-share listed companies in Shanghai and Shenzhen cities from 2014 to 2016 was selected as sampling data.They examined the age heterogeneity,gender heterogeneity,and academic qualifications of the senior management team under the defined criteria.The influence of quality and term heterogeneity on the quality of internal control,and then discussed the effect of the heterogeneity of the background characteristics of senior executives on the effectiveness of internal control under different property rights.The results show that:(1)In the whole sample,the age heterogeneity of the senior management team was negatively correlated with the quality of internal control,but there was no significant difference in the effect between state-owned enterprises and non-state-owned enterprises.(2)The gender heterogeneity of the senior management team is positively related to the quality of internal control,and the non-state-owned enterprises are more significant.(3)The heterogeneity of the academic management team is positively correlated with the quality of internal control,and non-state-owned enterprises are more significant.(4)The heterogeneity of the senior management team's tenure is negatively related to the quality of internal control.State-owned enterprises are more significant.The innovation of this paper is mainly reflected in the division of enterprises with different property rights.Using modern property rights theory as a guide,a comprehensive analysis of the heterogeneity of the senior management team combined with the background of property rights can be conducted to further explore its internal control of the company.Effect of effectiveness.At the end of this paper,we put forward specific suggestions for the optimization of the top management team of state-owned holding companies and non-state-holding companies.The main conclusions can be summarized as follows:(1)In general,companies should improve their internal control system according to their own situation.When selecting members of the senior management team,we must pay attention to the influence of the age,gender,academic qualifications,and the heterogeneity of tenure of the senior management team on the effectiveness of internal control.(2)For the state-controlled enterprises,it is necessary to maintain the stability of the members of the senior management team,with particular emphasis on the influence of term heterogeneity and age heterogeneity on the quality of internal control of the company,and avoid frequent changes in management;(3)for non-In the case of state-controlled enterprises,it is necessary to increase the gender ratio of women in the team in order to increase gender heterogeneity,making decisions more conservative and prudent.At the same time,when selecting members of the senior management team,they should appropriately refer to academic qualifications and pay more attention to their actual capabilities.