Researches On The Effect Of Corporate Governance On Effectiveness Of Internal Control

With economic development and changes in market conditions, internal control become increasingly important in enterprises, and gradually became the focus of attention of regulators, investors and management. Accounting theory and practice have also set off an internal control research boom. How to evaluate the effectiveness of internal control to meet the information needs of the users, and constantly improve the internal control system is a major problem worthy of further exploration. The paper researches factors affecting the effectiveness of internal control of listed companies in China from the perspective of corporate governance, tried to answer the following question:What is the criteria for judging the effectiveness of internal control? What are the factors of corporate governance structure effects on the effectiveness of internal control? How to improve the effectiveness of internal control based on corporate governance point of view?Referring to the related studies on internal control effectiveness at home and abroad, firstly, this paper makes clear the effectiveness of internal control, and analyzes the correlation between corporate governance and internal control bases on the contract theory and principal-agent theory; On this basis, the paper further analyzes the governance structure of listed companies effects on the effectiveness of internal control mechanisms; Then, under the guidance of the signal theory, I divided the listed company’s internal control information into internal and external indicators to measure the effectiveness of internal control; Based corporate governance perspective, The article uses the2008-2010panel data of China’s Shenzhen A-share listed on the Main Board companies and multiple regression model for empirical research. Final study found that corporate governance variables like the proportion of state-owned shares, ownership concentration, board size, proportion of independent directors and management ownership have considerably influential to the effectiveness of internal control. Based on the above empirical analysis, this the paper proposes the following improvements:optimize the equity structure, maintain an appropriate ratio of state-owned shares and ownership concentration, and reduce the stake of managers, to prevent the equity imbalance; strengthen the efficiency of Board Governance, proper control of the size of the board and increase the proportion of independent directors in order to construct the evaluation system which trinity enterprises, intermediary and government supervision.The conclusions of this paper can provide preliminary evidence of improving the corporate governance structure and the effectiveness of internal control of listed companies, and enhancing regulatory supervision of the listed companies’internal control.