Chairman-CEO Heterogeneity, Power Distance And Internal Control Quality

Since the United States enacted the Sarbanes-Oxley Act,the construction of internal control has triggered a boom around the world.Internal control has been promoted to the strategic height of stabilizing the capital market.How to build and implement a high quality internal control system has become one of the most concerned core issues in theory and practice.Previous studies have found that executive heterogeneity improves the quality of internal control,while these studies ignore that the members of the top management team don’t have the same right to speak.The chairman and CEO constitute the most basic and significant top echelon in Chinese enterprises,which can greatly affect the quality of internal control.Therefore,based on Chineae institutional background,focusing on the dual power core,it is urgently oretical and practical significance to explore the impact of chairman and CEO heterogeneity on the quality of internal control and the regulatory role of the power gap between them.According to the High-level Echelon Theory,Principal-agent Theory and Internal Control Theory,this paper selects A-share listed companies in Chinese main board stock market from 2017 to 2019 as research samples,adopts the method of logistic regression analysis,and follows the research ideas of "Chairman and CEO heterogeneity,internal control quality" and "Chairman and CEO heterogeneity,regulation,internal control quality".This paper examines whether and how the chairman-CEO heterogeneity of listed companies affects the quality of internal control,and further examines the moderating effect of power gap on the chairman-CEO heterogeneity.It is found that the greater heterogeneity of chairman-CEO professional background and education level,and the smaller heterogeneity of chairman-CEO tenure are helpful to improve the quality of internal control When the power gap is large,the heterogeneity of chairman-CEO education level and professional background can promote the improvement of internal control quality,and the negative effect of chairman-CEO tenure heterogeneity is inhibited;When the power gap is large,the heterogeneity of chairman-CEO professional background and education level can still improve the quality of internal control.The research shows that the heterogeneity of chairman-CEO professional background and education level is an effective means to improve the quality of internal control of listed companies,and its role is also regulated by the power gap.The results are helpful for listed companies to pay attention to the quality of internal control from the perspective of chairman and CEO heterogeneity,select and train core members of the top management team,establish the corresponding incentive mechanism,promote the long-term cooperation between the chairman and the general manager,and form an effective power supervision and balance system to ensure internal control operate effectively.