The Influence Of The Ownership Structure On The Internal Control Effectiveness Of State-owned Enterprises Under The Background Of Classified Management

In August 2015,the guiding opinions of the Central Committee and the State Council on deepening the reform of state-owned enterprises(the following referred to as“opinion”)for the first time divides state-owned enterprises(SOEs)into commercial and public welfare categories.The commercial SOEs are refined into competitive and special functional categories.And the competitive categories are the SOEs that are in a fully competitive industry and field,the special functional categories are the SOEs that are in important industries and key areas and need to undertake major national special tasks.Although the academic circles have begun to explore the classification management of SOEs since the 90 s of last century(Dong,1995;Research group of Renmin University of China,1998),but the promulgation of the “opinion” officially opened the prelude to the classified management of SOEs.It means that the governance model of SOEs is no longer rigid uniformity,and will use the classification management based on the different positioning of SOEs.The ownership structure is the foundation of corporate governance.The “opinion” suggests that public welfare SOEs should be wholly owned by state-owned capital,and the diversification of investment subject also can be carried out for public welfare SOEs.The opinion also encourages the equity structure diversification and state owned holdings can be carried out respectively for the competitive SOEs and the special functional SOEs.This means that SOEs should carry out equity structure reform based on their own development goals.Internal control system is an important protection tool for shareholders' rights and interests,which will play a different role in making profit for different shareholders in a company with different ownership structure.Then,under the background of the current SOEs reform,what is the difference in the impact of the ownership structure on the internal control effectiveness in different categories of SOEs?Therefore,taking listed companies in Shanghai and Shenzhen A shares during2010-2015 years as the research object,this paper classified the SOEs based on the“opinion” and studied different types of SOEs,and reached the following conclusions:in different types of SOEs,the ownership structure of different dimensions has different effects on the effectiveness of internal control.Firstly from the view of the proportion of state-owned shares,it is positively related to the internal control effectiveness in public welfare and special functional SOEs,which means improving the proportion of state-owned shares in these two kinds of SOEs is beneficial to improve the internalcontrol effectiveness.But the impacts of the proportion of state-owned shares on the internal control effectiveness present as an inverted-U curve in the competitive SOEs,which means in this kind of SOEs the proportion of Chinese shares in a certain range is conducive to the improvement of the effectiveness of internal control,but more than a certain proportion will reduce the effectiveness of internal control.Secondly from the view of the proportion of managerial ownership,there is no significant relationship between the proportion of managerial ownership and the effectiveness of internal control in public welfare SOEs,which means the effect of increasing the proportion of managerial ownership on the effectiveness of internal control is not obvious in this kind of enterprises.But the impacts of the proportion of managerial ownership on the internal control effectiveness present as an inverted-U curve in special functional and competitive SOEs,which means in these two kinds of SOEs the proportion of managerial ownership in a certain range is conducive to the improvement of the effectiveness of internal control,but more than a certain proportion will reduce the effectiveness of internal control.Finally from the view of the proportion of funds,it is positively related to the internal control effectiveness in public welfare and special functional SOEs,which means improving the proportion of funds in these two kinds of SOEs is beneficial to improve the internal control effectiveness.But the impacts of the proportion of funds on the internal control effectiveness present as an inverted-U curve in the competitive SOEs,which means in this kind of SOEs the proportion of funds in a certain range is conducive to the improvement of the effectiveness of internal control,but more than a certain proportion will reduce the effectiveness of internal control.The conclusions of this paper provide theoretical support and empirical evidence for the classified management of SOEs,which is beneficial for SOEs to improve the effectiveness of internal control and optimize their ownership structure based on their own different orientation.This research also contributes to the classification supervision,classification examination and classification of mixed ownership reform of SOEs,and helps to promote the smooth progress of SOEs reform.