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

With the rapid development of economic,the size of all types of enterprises has been expanding continuously,internal management issues also come to the surface.No matter how large the scale is,and how complex the process is,it is important for the enterprise to have a sound internal control system,as its performance can be a long-term steady rise for the top priority.Mature internal control is like the steward of the enterprise,from standardizing the system process to monitoring the financial data,on the one hand,it can sort out the operation flow of the enterprise to make it healthy and stable,on the other hand,it can guarantee the true,legal and reliable financial data of the enterprise.Although not directly generating profits,effective internal control for enterprises can make a difference to avoiding risks and improving the management level,and its hidden benefits can not be underestimated.However,the direction and implementation of internal control are neither passive nor basic.As the concrete creator and actor of business strategy and decision-making,the top management team of the enterprise is directly participating in the daily operation of the enterprise,they have a crucial influence on the effectiveness of the internal control of the enterprise.Therefore,the main content of this dissertation is the influence of top management team characteristics and vertical differences between chairman and top management team on the effectiveness of internal control.This paper reviewed the relevant literature,established the research direction of this dissertation,and then carried out the relevant theoretical analysis,summarized the characteristics of the top management team,the influence of vertical differences between chairman and top management team on the effectiveness of internal control,and then put forward the research hypothesis of this thesis.The data of 1334 top management team of listed companies in Shanghai and Shenzhen Stock Exchanges from 2012 to 2016 were selected as the research samples.The multi-linear regression method was used to analyze the influence of top management team characteristics and vertical differences between chairman and top management team on the effectiveness of internal control.This paper argues that: the longer the top management team's average tenure,the higher the level of effectiveness of internal control,which is significant for companies with different property rights;the higher the average education level of top management team,the effectiveness of internal control.The higher the level is,the more obvious is in the state-owned companies.The high proportion of female executives in the top management team has an impact on the improvement of the effectiveness of internal control,and the influence of non-state-owned companies is even more prominent.The higher academic heterogeneity of top management team,the lower the level of effectiveness of internal control,and more prominent in the state-owned companies;The vertical education level difference between chairman and top management and the effectiveness of the internal control is significantly negative related,non-state-owned companies are even more significant.At last,according to the result of the analysis,the paper draws the conclusion that firstly,to ensure the validity of term of office of top management team and avoid the frequent change of top management team;secondly,to reduce the heterogeneity of senior management team level and maximize the team members of the academic level;Finally,the appropriate increase in the proportion of female executives in the team.The main innovation of this dissertation is that while studying the average characteristics and heterogeneity characteristics of the top management team,we also add the vertical differences between the chairman and the top management team to study the effectiveness of internal control,analyzes the influence of vertical difference between chairman and top management team with different property rights on the effectiveness of internal control and enriches the research on internal control theory for the first time.