Research On The Influence Of Top Management Team Charateristics On Internal Control Effectiveness

Recent years, more and more people pay attention to internal control, and it has become an important means of modern management. One hand, the effective internal control can help enterprises to achieve business objectives, improve economic efficiency and reduce loss of resources. On the other hand, the effective internal control can help enterprises to guarantee the reliability of the financial report, ensure enterprise behavior comply with laws and regulations, maintain and promote reputation of enterprise for long-term development. Many scholars study the influence factors of internal control effectiveness and how to improve the effectiveness of internal control, however, few scholars research the influence of top management team characteristics on internal control effectiveness. Since the team is responsible for the daily operation of the internal control and internal control effectiveness is very important, if we ignore the effect of top management team to internal control effectiveness, it will effect the implementation of the internal control of control, which is disadvantageous to enterprises to achieve goals.This paper is based on the upper echelons theory perspective, using agency theory, stakeholder theory and group theory as the theoretical support. At the same time, the paper used theory and empirical research, qualitative and quantitative analysis, analyzed the data of listed companies to research the impaction of top management team on the effectiveness of internal control. The paper inspect the influence of the seven specific characteristics on the effectiveness of internal control, which content of team size, the average age of top management team members, the average level of education, average tenure and age, educational level and tenure heterogeneity. Based on empirical test of conclusions, the paper recommends optimizing top management team.Through empirical testing of theoretical assumptions, the paper's main conclusions are as follows: First, top management team size is positively related to the reliability of the financial report and following the laws and regulations. Second, the average age of top management team is positively related to corporate performance. Third, the average education level of top management team is positively related to following the laws and regulations. Fourth, the average tenure and the target of internal control are not relevant. Fifth, the age heterogeneity is positively related to corporate performance, but it is negatively related to the reliability of the financial report and following the laws and regulations. Sixth, the education level heterogeneity is negatively related to corporate performance. Seventh, the tenure heterogeneity and the target of internal control are not relevant.Innovation of this paper is mainly reflected in the use of upper echelons theory, from the top management team members can measure the values, cognition and other psychological factors, characteristics of top management team as the starting point on the effectiveness of internal control. Validated, confirmed the top management team is characterized by factors affecting the effectiveness of internal control, which can show upper echelons theory can be applied to research the effectiveness of internal controls for the study of the effectiveness of internal controls and how to improve the effectiveness of internal controls to provide a new ideas and methods.