The Research On The Relevance Of Corporate Governance Characteristics And Internal Control Validity

It is widely accepted in practice and theory field that both of corporate governance and internal control make business management more efficient. But how to inspect and discern the validity of corporate governance and internal control is not only a controversial question in academic circle but also an important subject with more and more attention by public.In the foundation of the literature review and the theoretical analysis, this paper systematical analyzes the relevant theories of corporate governance and internal control, and then in a new way of corporate governance characteristics carries on the empirical analysis on the relevance between corporate governance and internal control of the Chinese listed companies, and draws the following conclusions:Firstly, on the basis of the theoretical analysis, this paper obtains:the combination of corporate governance and internal control effectively reduces the cost of the adverse choice and the moral hazard produced by the principal-agent problem. As a kind of enterprise's system arrangement, the corporate governance has the inner link with the internal control which is a kind of enterprise's finance surveillance system. On the one hand, the good corporate governance forms the surveillance mechanism to checking and balancing each other among the investors, operators and so on; on the other hand, the surveillance mechanism is the organizational safeguard for which the internal control system can effectively carry out. The good internal control is helpful to complete operator's accountability to the investor and to realize the goal of corporate governance.Secondly, on the basis of the empirical analysis, this paper obtains: corporate governance characteristics about the soundness and fulfillment of duties in board of directors, the fulfillment of duties in board of supervisors is in direct proportion to internal control validity. And corporate governance characteristics about board of shareholders and the separation between chairman of board and general manager has no correlation with the internal control validity.Thirdly, on the basis of the case study, the article analyzes different control points of internal control in corporate governance level. And then investigates the effect and influence of corporate governance characteristics to internal control validity in board of shareholders, internal audit and other aspects. It is the practice test of the relevance between corporate governance characteristic and internal control validity. The contribution of this paper is:on the basic of relationship between corporate governance characteristics and internal control validity, details the indexes, further analyzes the direction and depth of influence from corporate governance characteristics to internal control validity; reveals their mutual promoting mechanism. In consideration of time influence, the article using panel data to empirical analyze the relevance between corporate governance characteristics and internal control validity, in order to provide empirical evidence in improving corporate governance and internal control.