Ownership Concentration,Internal Control Deficiencies And Corporate Fraud

Since the start of the 90 s of last century,China's securities market has developed rapidly.In just over 20 years,the number of listed companies has grown from 8 to more than 3000.However,behind the rapid development,there are many problems,such as active short-term speculation,numerous corporate fraud.The violation of listed companies not only infringes the interests of investors,but also disrupts market order and hinders the development of securities market.Therefore,in recent years,China's securities regulatory authorities attach great importance to the violation of listed companies,and continue to introduce relevant systems to strengthen regulatory intensity.However,the illegal management of listed companies requires not only the institutional guarantee of regulatory authorities,but also the continuous improvement of corporate governance structure.Ownership structure has always been a concern in corporate governance.The main role of large shareholders in the company is the focus of academic debate.In view of this problem,there are two main points of view in the academic circle: one is "alignment effect".The view is that,with the increase of ownership concentration,the overall interests of the large shareholders and the company tend to be consistent,the ability to improve the company supervision and the enhancement of motivation can effectively reduce the agency cost and improve the company.Operating efficiency and improving the company's performance;the other is "tunneling effect".The view is that,with the increase of ownership concentration,the ability of large shareholders to take advantage of controlling private interests is enhanced,and then the interests of small shareholders are increased and the listed companies are emptied.It can be seen that the role played by academia in ownership concentration in corporate governance has not yet reached a consistent conclusion,which deserves further study.In addition,according to the theory of internal control,as a mechanism to guarantee the operational efficiency and property security of the organization,effective internal control can restrict the management of the company and the large shareholders.When internal control is defective,the different roles of large shareholders in corporate governance may have a completely different impact on the relationship between ownership concentration and corporate irregularities.The introduction of internal control defects can better reveal the role of major shareholders in corporate governance.Thus,this paper studies the relationship between ownership concentration and corporate violation,and discusses the effects of internal control defects on the basis of two roles of large shareholders.This paper first summarizes and summarizes the research results at home and abroad.Then combined with the hypothesis of economic man,principal-agent theory,information asymmetry theory,management level power theory,alignment effect and tunneling effect,this paper suggests some hypotheses.Finally,we use the 2012-2016 year data of China's main board listed companies to conduct Logit empirical test,and adopt propensity score matching(PSM)and other methods to carry out robustness test.Through the above studies,we find that: first,the ownership concentration has a negative correlation with the possibility of company's violation;second,the companies with internal control defects are more likely to violate the rules;and third,the existence of internal control defects will weaken the restraining effect of the ownership concentration on the company violation.The possible innovations in this paper lie in the following aspects: first,the innovation of research perspective.On the one hand,few scholars have studied the relationship between ownership concentration and corporate irregularities.On the other hand,according to the literature collected in this paper,there has not been a study of the relationship between the degree of ownership concentration,internal control defects and corporate violation of the three,which has enriched the related research to a certain extent.The second is the innovation of the research method.The existing researches on corporate violation usually only use full sample test or traditional paired test,which easily leads to self selection bias and affects the test results.In this paper,we adopt a combination of full sample test and paired sample test.At the same time,in the paired sample test,we use the tendency score matching(PSM)to concentrate the multi background features of the research object into one index,which is the tendency score value,in order to solve the endogeneity problem caused by the sample self selection error.