Research On Executive Overconfidence,Media Attention And Internal Control Effectiveness

Since China's reform and opening up,especially after entering the 21 st century,the economic development of our country in profound changes in the internal and external environment,enterprise facing the situation is complicated,the ability of the risk prevention and management control put forward higher requirements.In recent years,financial failures and disclosure of financial irregularities of listed companies emerge one after another.As an endogenous corporate governance tool that can effectively prevent and control risks,internal control plays a crucial role in effectively avoiding the uncertain risks faced by enterprise operations.Theory and practice show that the effective implementation of enterprise internal control is inseparable from a sound internal control system and a mature and stable governance mechanism,but the effective operation of the company's internal control system is still constrained by various factors,so that the internal control can not fully play its role.Executives as the major persons-in-charge of the internal decision-making and execution,the individual psychological characteristics is greatly affected by external behavior the effect of internal control.the outbreak of Enron and subsequent a series of policy making,caused the social from all walks of life for the enterprise internal control constant attention,along with the development of the information era,media reports also play an important role in promoting companies to improve their internal governance mechanism.Based on the above background,many scholars have conducted in-depth studies on various factors affecting the effectiveness of internal control,but few scholars have combined the attention of external media with the psychological characteristics of internal executives to explore the effect of internal and external factors on the effectiveness of internal control.Therefore,this article from the psychological characteristics of executive overconfidence and the perspective of media attention,on the basis of theoretical analysis,select the Shanghai and Shenzhen A shares in 2011-2018 data of listed companies,on the overconfidence theory,information asymmetry theory,principal-agent theory and signaling theory as the foundation of theoretical research,discusses the executive overconfidence,media attention,and the relations between internal control effectiveness,and empirically by building regression model.The conclusion is as follows: the psychological characteristics of overconfidence of senior executives can inhibit the effectiveness of internal control;External media attention plays a positive role in the effectiveness of internal control.Media attention plays a significant moderating effect on the effect of overconfidence on the effectiveness of internal control,that is,with the increase of media attention,the inhibiting effect of overconfidence on the effectiveness of internal control will gradually weaken.Based on the above conclusions,this paper puts forward that the executive psychological factors as well as the media supervision into company governance framework in order to enhance the effectiveness of internal control recommendations.