Impact Of Management Ability On The Effectiveness Of Internal Control

Since the US enacted the SOX Act in 2002,the importance of internal control has become increasingly prominent,and internal control has gradually become one of the effective ways to prevent corporate risks and improve management quality.China has promulgated internal control construction standards from 2008 to 2010.In 2012,all domestic listed companies in China were required to establish an internal control standard system.Internal control implementation and information disclosure have become mandatory requirements for listed companies in China.However,the financial fraud incidents of listed companies have occurred from time to time.This explains to some extent that internal control has prevented corporate risks,especially the role of preventing financial risks.At present,the theoretical community pays more attention to the study of the effectiveness of internal control,but most of the discussion on the impact of factors such as company growth,corporate governance structure,and background characteristics of the board on the effectiveness of internal control,there is little literature to discuss the management ability to internal control of the enterprise.Whether the effectiveness has an impact and what effect.According to the "high-level echelon theory" proposed by HamBrick and Mason in 1984,the heterogeneity of management influences the company's strategic choice.Under the leadership of management with different capabilities,the internal control environment,risk awareness and strategic positioning of the enterprise are very different.Therefore,whether management ability has an impact on internal control construction is worth exploring.In addition,the effectiveness of management capabilities on internal controls may also be influenced by subjective and objective factors.Based on relevant theories,this paper combines norms and empirical methods to explore the effectiveness of management ability with regard to the internal control,and further examine whether the relationship between management ability and internal control can be affected by subjective pay equity,and the relationship between the two is in the state.Also,the difference between in/non-state enterprises have been investigated.This paper can be divided into five parts.First,the introduction chapter describes the research background,research significance,research ideas and research innovations of this paper,and returns the relevant research literature on the related research of management ability and the influencing factors of internal control effectiveness at home and abroad.The second chapter discusses the related concepts and foundations,which defines the concepts of management ability and the effectiveness of internal control.And it describes the theory of high-level echelon,internal control theory,principal-agent theory and organizational justice theory.The third chapter conducts analysis toward research hypothesis,theoretically.It describes the status quo of the effectiveness of internal control of listed companies in China,and explains the relationship between management ability and the effectiveness of internal control,as well as the sense of fairness and property rights.The differences caused by the relationship further raise hypothesis.The fourth chapter describes the experiment setting and analyzes the results.This chapter selects 8002 observations of all A-share listed companies in 2011-201 7 as research samples and conducts expeirments to verify the hypothesis.The last chapter summarizes the conclusion of this paper,including the contribution and limit of this paper.Furthermore,based on the research,the policy recommendations are raised to promote the practical value of this paper.The study found that:(1)management ability is significantly positively correlated with internal control effectiveness,that is,the greater the management ability,the higher the effectiveness of internal control;(2)the more fair the management compensation,the effectiveness of management ability on internal control The promotion effect is more significant;(3)Compared with state-owned enterprises,in the non-state-owned enterprises,the management ability can better promote the effectiveness of internal control.