A Study On The Relationship Between Internal Control,Management Power And Excessive Financing

Financing is an important issue for enterprises.A reasonable financing structure can maximize the role of funds and improve business performance.Exceeding the limit of financing will increase the cost and risk of the company,especially if there is too much debt financing,there will be a risk of bankruptcy.At the same time,it will also cause inefficient use of funds,cause waste of funds,and have a poor impact on business performance.Therefore,the issue of financing is important and complicated,which has always been the focus of scholars’ research.In recent years,the phenomenon of excessive financing by listed companies has frequently occurred,which has aroused widespread concern in the society.It is particularly important to curb the excessive financing behavior of listed companies,make them use the raised funds reasonably,and avoid idle and wasted funds.The internal control is established internally by the company,through means such as containment,restraint,protection,and supervision,to make the company’s financial reports more reliable,its operations more efficient,its assets more secure.In view of the fact that internal control can improve the rules and management mode of the enterprise,it has a positive governance effect.Therefore,it is of theoretical and practical significance to explore the effects of internal control on overfinancing.The research takes A-share non-financial listed companies from 2014 to 2018 as a sample and uses the ordinary least squares method to analyze.The results show that the quality of internal control is significantly negatively correlated with the overfinancing rate of the enterprise.The better the quality of internal control of the enterprise,the lower the level.And the managerial power can weaken the restraining effect of the quality of internal control on the overfinancing of enterprises,especially in state-owned enterprises,the greater the power of management,the weaker the restraining effect of internal control on the overfinancing of enterprises.Further research finds that when external governance is poor,managerial power can weaken the restraining effect of internal control on over-financing.That is,when the institutional investor’s shareholding ratio is low,when the number of analysts tracking is small,and product market competition is weak,the managerial power will weaken the restraining effect of internal control on excessive financing.When external governance is better,managerial power and internal control crossover items have no significant impact on excessive financing.The internal control system,as a system for improving corporate rules and management models,can play an active and effective governance role and reduce excessive financing behavior of enterprises.Manager is the actual executor of the internal control system.When the power of the manager is too large,it can weaken the supervisory role of the board of directors and the board of supervisors,bypass the company’s internal control system.Therefore,while improving the construction of the internal control system of the enterprise,it is also necessary to improve the external governance mechanism,constrain managerial powers,and combine internal and external restraints to reduce excessive corporate financing.The research on internal control,managerial power and excessive financing has enriched the existing research content,enriched the theory of financial governance,and provided a reference and reference for solving the problem of excessive financing of enterprises.