Research On The Relationship Of Management Power,Internal Control And Perks

In recent years,the scandals of listed company executives that have the high-profile perks have been exposed by the media,which is shocking.For example,in 2013,China Railway Construction Corporation's 800 million yuan high business hospitality incident,the unidentified deposit events of the Founder Group CEO and CFO in 2014,and the 2015 China Telecom executives' public funds for eating,drinking and high-consumption entertainment activities,which made the issue of on-the-job consumption of executives a hot topic of concern,and it has also caused heated discussions in the academic and practical circles.As the product of the imperfect salary incentive contract,the setting of on-the-job consumption itself has certain rationality.However,in the current enterprise practice,the on-the-job consumption of executives has brought a lot of problems,which exceeds the reasonable boundary.On-the-job consumption has hidden maneuverability,which makes some of the consumption surfacely into the private income of the executives,becoming a way of gaining private interests.High-end banquets,unscrupulous public funds to eat and drink,the consumption that purely satisfying the desire for self-satisfaction,etc.fully demonstrate that the on-the-job consumption of executives can be described as chaotic,which will not only seriously infringe the interests of shareholders,but also reduce the efficiency and value of enterprises,which will cause the company to face various risks and challenges,as well as disrupt the social atmosphere and affect the orderly operation of society.More and more research based on Managerial Power Theory has revealed the selfinterested motives of executives who are agents in recent years.It is believed that corporate executives not only have strong rent-seeking motives,but also have sufficient ability to influence the formulation of their own salary through power manipulation,and corporate executives tend to use their power to seek private benefits,chasing personal self-interest,especially increased on-the-job consumption,which is more easily favored by executives as an invisible deprivation.However,how to restrain the excessive on-the-job consumption of executives? How to restrain executives from gaining the self-interested behavior of on-the-job consumption through their power? At present,most of the current research focuses on corporate governance variables to study how to curb on-the-job consumption such as internal and external governance mechanisms,such as shareholder governance,board structure,enterprise characteristics and external supervision.Based on the internal governance perspective,this paper starts with the internal control system,which is an easy-to-operate institutional system variable,to explore the mechanism of how to curb executives' powerseeking behaviors.As an institutional arrangement and operation mechanism of enterprise rights and responsibilities,the internal control system of an enterprise is an important measure of the company's operation and management and an important part of corporate governance.The internal control system of enterprises plays a key role in coordinating contractual relations in the context of separation of ownership and control,especially restricting and supervising executive management and behavior,and restraining executives from abusing power and spending extravagantly.Our paper is based on the current situation of the governance background of listed companies in China and discusses whether management power and internal control will have an impact on the job consumption of enterprises,and further examine the role of internal control in the regulation of management power and on-the-job consumption.It reveals the mechanism of the influence of management power and internal control on the job consumption under different property rights.In this paper,we study the relationship between management power,corporate internal control,and perks in Shanghai and Shenzhen A-share listed companies in 2013-2017.The empirical results show that: Firstly,the management power is significantly and positively related to the perks of the enterprise.That is to say,the greater the management power,the greater the perks of the enterprises.After distinguishing the nature of property rights,the expansion of management power of non-state-owned listed companies has a stronger driving effect on the perks of enterprises.Secondly,internal control is significantly negatively correlated with the perks,and internal controls can negatively regulate the relationship between management power and perks.Moreover,after further distinguishing the nature of property rights,we also found that the enterprises' internal control of non-state-owned listed companies plays an significantly important role in restraining the perks obtained by power,compared with state-owned listed companies.