Research On The Moderating Effect Of Internal Control On The Relationship Between The Executives' Political Connections And Corporate Performance

After the 18th National Congress of the Communist Party of China,the country started the new reform strategy involving all over the country,in particular the of action of anti-corruption.Recently,many corrupt officials have been found out,so the political atmosphere and the economic environment has been clean.A key word,executives' political connections which is connect politic with economic in stock market,has become a hot research problem.This paper,taking 2012-2016 a-share listed companies as the research object,analyzes the relations between executives'political connections with corporate performance,the moderating effect of internal control on the relationship,and the influence of internal control information disclosure on the moderating effect of internal control.In this paper,,we value the executives ' political background,multiplied by the position of corresponding executives,and sum all key executives,score as a measure of the political connections.The DIBO internal control index is used to represent the level of internal control of the enterprise and is divided into two groups according to the median;The DIBO internal control information disclosure index is used to represent the quality of the information disclosure and is divided into two groups according to the median;Using the enterprise return on total assets(ROA)and the enterprise return on common stockholders' equity(ROE),which on behalf of the enterprise's performance level.In this paper we examine the relationship between the executives,political connections and corporate performance,the moderating effect of internal control and the influence of internal control information disclosure on the moderating effect of internal control.Test results are as follows:(1)The executives,political connections of listed companies has a significant positive correlation with the enterprise performance,namely the more strength of political connections,the enterprise performance is better;(2)In listed companies,internal control has a significant negative moderating effect on the relation between political connections and corporate performance.That is to say,the better the internal control,the more they can restrict the promotion of political connections to improve corporate performance;(3)high-qualified information disclosure of the internal control can strengthen the negative moderating effect,namely,the better the information disclosure,the better the internal control,and the negative moderating effect is stronger.Finally,the conclusions of this paper are summarized and some Suggestions are put forward:the listed companies should reasonably treat the political connection of executives,and enhance the core competency of enterprises;Strengthen the internal control construction and information disclosure in enterprises to restrict the performance promotion of the political connections;The state should build complete laws,perfect regulations and effective mechanism to supervise the political connections behavior of senior executives externally.