Does Corporate Governance Structure Influence The Effectiveness Of Internal Control

The financial crisis is slowly faded away, but people still fear its destructive power. Investors lacking of confidence, the market remaining sluggish, all of these compel governments and regulators to speed up the pace of reform, the introduction of more stringent regulatory rules; however, the significance of the financial crisis should not be limited to troubleshooting trap, but rather a critical review of the past, looking forward to the future. One point is that Lehman Brothers which has a 158-year glorious history, filed for bankruptcy protection, and ultimately caused a critical situation facing liquidation; also the third-largest U.S. investment bank Merrill Lynch is sold to Bank of America for 44 billion dollars. Both of them had "perfect internal control," but the international giants all failed in real battle. Is internal control itself insufficient to play a defensive role of the risk? Or do other imitations have perverted its function?In our country, there are a series of incidents of fraud and business failure, for example, Eastern Airlines, CITIC Pacific has suffered huge loss because of investment in derivatives. These events have forced the government and relevant regulatory authorities to pay attention to the internal control, and they expect to take positive measures to effectively reduce or prevent recurrence of similar incidents. That a series of internal control monitoring system having been introduced proves that the government and the relevant regulatory authorities hold high expectations of internal control.In practice, there are lots of factors effecting internal control, such as the improvement of regulatory laws, the attitude of management, and internal control. The internal control has a good relationship with governance structure. Does corporate governance structure impact effectiveness of internal control? How? It needs verification. So this paper selected the listed companies to analyze empirically about the corporate governance structure influencement on the effectiveness of internal controls, in order to find the extent and impact factors, and attempts to improve the effectiveness of internal controls to curb financial fraud and improve the status of accounting information, and then provide suggestions to improve the efficiency and effectiveness, and promote the development of the securities market.This paper selects A share company listed in Shenzhen Exchange as samples, using empirical research methods to study the various aspects of corporate governance factors on the effectiveness of internal control. The selected explanatory variables are ownership structure characteristics, board characteristic, size of supervisors, and whether the manger is chairman of board, and also attempting to introduce the establishment of the internal audit department. The results show that the corporate governance structure on the effectiveness of internal controls had a greater impact in different ways.This paper is divided into four parts:The first part is an introduction section. This paper describes the corporate governance structure on the effectiveness of internal control motivation, meaning, explore and study limitations, and review the research status at home and abroad, this paper also pointed out that the proposed method of research ideas and research methods. Literature review of some of the major review of domestic and internal control information disclosure of listed companies the relevant literature and research of the literature was briefly summarized and reviewed.The second part is the theoretical analysis. First, the concept of corporate governance is defined, analysis of the internal control and corporate governance structure of relationships and the effectiveness of internal control is defined, and on this basis from the theoretical point of view of the corporate governance structure on the effectiveness of internal control effects.The third part is the empirical research component. By 2009, listed on Shenzhen A shares of the company targeted empirical research. Including the formation of the specific research hypotheses and the selection and assignment variables, sample selection and, in this based on descriptive statistics of each variable, and then build multiple linear model and binary logistic regression model and correlation tests and regression testing, the final empirical studies draw conclusions.The fourth part is the policy recommendations. The empirical results in the previous section, based on the structure for corporate governance impact on the effectiveness of the role of internal control and the corresponding level of improvement measures and policy recommendations. Policy recommendations include optimizing equity structure, and improve the board mechanism, give full play to the supervisory role of the board of supervisors and the use of an effective internal audit department supervision.The innovation is that this paper discusses the impact on the effectiveness of internal control from the overall corporate governance structure, and experimented with the introduction of the internal audit department as explanatory variables to validate the effectiveness of internal control.