Research On The Relationship Between Board Characteristics And Internal Control Defect Disclosure Of Small And Medium-sized Listed Companies

The report of the 19 th National Congress clearly pointed out that China's economy has entered a new era,and the most basic feature is that the economy has shifted from a high-speed growth stage to a high-quality development stage.As an important part of China's national economy,small and medium-sized enterprises account for more than 90% of the total number of enterprises in the country and provide more than 80% of jobs for the whole society.Their high quality and long-term healthy development are the foundation and prerequisite for social harmony and stability.However,China's small and medium-sized enterprises generally have short life cycle characteristics.One is due to the difficulty of financing of small and medium-sized enterprises,and the other is the weak internal control of small and medium-sized enterprises.The establishment of the SME board of the Shenzhen stock market in China has solved the financing difficulties of some small and medium-sized enterprises to some extent,but the high-quality and sustainable development of small and medium-sized enterprises also depends on the improvement of their own internal controls.With the promulgation of a series of policies and laws and regulations such as the "Basic Standards for Enterprise Internal Control" and "Guidelines for the Evaluation of Enterprise Internal Control",listed companies were forced to disclose internal control evaluation reports.However,the disclosure of internal control information,especially internal control defect information,by listed companies is at the selective disclosure stage.Simple disclosure and vague disclosure are common and fail to achieve the expected disclosure effect.The board of directors,as an intermediary between shareholders and managers,occupies a core position in the corporate governance structure and plays an effective role in alleviating the principal-agent problem.According to relevant regulations,the board of directors is responsible for the truthfulness and completeness of the internal control deficiencies disclosed.Based on the research results and practical exploration experience of domestic and foreign companies' internal control deficiencies,this paper selects the strict data of small and medium-sized listed companies in China from 2015 to 2018,and analyzes the relationship between the characteristics of the board of directors and the disclosure of internal control deficiencies of small and medium listed companies.revealing the role of the board of directors in the disclosure of internal control deficiencies of small and medium board listed companies,and the impact of the board of directors' composition,behavior,incentives,and quality characteristics on the disclosure of internal control deficiencies of small and medium board listed companies in China.Putting forward the optimization strategy for the disclosure of internal control deficiencies of small and medium-sized board listed companies in China with the characteristics of the board of directors,in order to effectively improve the management and control efficiency of the internal control deficiencies of small and medium board listed companies,and promote the sustainable and healthy development of small and medium board listed companies.The main conclusions are :(1)The board of directors is composed of directors with the characteristics of economic persons.The profitability of economic persons makes the members of the board of directors tend to pursue personal self-interest,and untrue,effective and complete disclosure of internal control defects of small and medium-sized listed companies.The characteristics of the board of directors can affect the function of the board of directors to a certain extent,and it will also inevitably have a certain impact on the disclosure of internal control defects of listed small and medium-sized companies;(2)The moderately small board size,the stronger the board independence or the greater the proportion of independent directors,the more it will help alleviate the principal-agent problem under information asymmetry,suppress the occurrence of opportunistic behavior,and improve the effectiveness and objectivity of internal control defect disclosure.The separation of chairman and general manager can strengthen the company's power balance and help improve the quality of disclosure of internal control deficiencies in listed companies;(3)Most of the board meetings of small and medium-sized listed companies discuss the company's daily operations and management,and the lack of internal control deficiencies makes the board meetings invalid for internal control deficiencies;(4)The high level of shareholding of the board of directors and the tendency to profit make board members conceal defects in internal control.The stronger the board's remuneration incentives,the board's supervisory responsibilities are strengthened positively,so that its power can be brought into full play,the moral hazard is effectively reduced,and the quality of internal control flaw disclosure is improved;(5)The education background of board members has a significant positive impact on the quality of disclosure of internal control deficiencies;(6)Small and medium-sized board listed companies have appropriately controlled the size of the board of directors,improved the selection ofindependent directors,established a leadership structure with the separation of chairman and general manager,reasonable board meetings and forms,strengthened board compensation incentives,and appropriately reduced the proportion of equity incentives and increased In terms of the quality of the members of the board of directors,efforts have been made to improve the quality and level of the company's internal control information disclosure in order to promote the company's sustainable and healthy development.