Research On The Effect Of The Communist Party Of China’s Participation In Corporate Governance On The Effectiveness Of Internal Control

In recent years,the private economy,as an important part of China’s socialist market economy,has grown rapidly under the guidance of the Party,providing solid support for China’s economic prosperity and ensuring employment.However,with the expansion of private enterprises,various problems have arisen,including internal friction,management speculation for personal gain,and secret struggles for equity.The occurrence of fraud has focused the public’s attention on the effectiveness of internal controls in private listed companies and has led to discussions on effective solutions for internal controls.At the same time,in order to better implement the Party’s policies and to integrate with the advantages of our system,many private enterprises nationwide are paying more and more attention to corporate party building,gradually setting up party organisations within the enterprises and scrambling to carry out various forms of party building activities.Some well-known private enterprises have even taken the lead in announcing the establishment of party committees,providing an excellent model for other enterprises.In view of this,how to play the proper function of the party organisation in private enterprises,focusing on the role of the party organisation’s participation in governance on internal control,has become a top priority.Therefore,in order to explore the party organization in private enterprises in the internal governance dimension of effective governance control,this paper collates the current state of research,traces the development and transformation of private enterprises’ party organisations in China,and selects the three main internal control objective dimensions of operational effectiveness,financial reporting reliability and legal compliance to examine the impact of the party organization existing in the private enterprise on the internal control of the enterprise,and considers the moderating role played by the digitalisation of companies in the context of the digital economy.This paper conducted an empirical analysis based on a sample of 10,987 valid data samples selected from private listed companies in Shanghai and Shenzhen A-shares from 2017 to 2021.The results show that an increase in the degree of participation of party organisations in governance will significantly enhance the effectiveness of internal control in private enterprises,and the digitalisation of enterprises has a significant positive moderating effect on the relationship between the two.Further comparison of the sample into different groups reveals that the extent to which party organisation involvement in governance improves the effectiveness of internal control varies across private enterprises in different regions and sizes.The effect on the effectiveness of internal control in private enterprises in the eastern region was more significant than in the central and western regions,and in the dimension of scale,i t is found that the small and medium-sized private enterprises often have poor correlation effect,while the large-scale enterprises have significant promotion effect.In this paper,the experimental results and related analysis as the basis for the study.This paper provides conclusions and observations,and offers some targeted approaches and tools for governments and enterprises respectively.The findings of this paper extend the governance effect of party organisations in private listed companies,enrich the relevant research on internal control and provide important references for related companies to strengthen party building work.