Empirical Study On The Relevance Between Manager’s Residual Claim Right&Reidual Control Right And Internal Control Auditing

Based on the enterprise contract incompleteness, residual claim right&residualcontrol right are produce. Things we found in the literature at home and abroad, such as：distributing residual claim right&residual control right of management legitimately is aneffective incentive and supervisory mechanism，and also a solution to the company’sproblem caused by the separation of ownership and control of the agency.；And it can alsoreduce the agency cost. However internal control auditing can help establish and improvean effective internal control, to form a supplementary contract, induce manager’sopportunism behavior and ease the conflict in agent. The distribution arrangements ofresidual claim right&residual control right and internal control auditing are two importantcorporate governance mechanisms of modern enterprises. And therefore study about theresidual claim right&residual control right of manager’s and internal control auditing issignificant to perfecting right distribution mechanism of listed companies of China, butalso to improving internal control audit role in the security market.Firstly, the influence of manager’s residual claim right&residual control right oninternal control audit was studied by the principal-agent theory, signaling theory andasymmetry information theory. Based on the principle of self-interest, the manager hasdifferent behavior tendencies about internal control auditing under different distributionarrangements of those two rights.Secondly, this thesis tests the connection of manager’s residual claim right&residualcontrol right and internal control auditing by drawing samples of China’s security marketfrom2009-2011. Main conclusions of the study are as follows:(1)The greater the residualcontrol right of manager, the less likely the listed company conduct internal controlauditing.(2) Manager shares more residual claim right leads to higher enthusiasm ofinternal control auditing.(3) Symmetry between residual control right and residual claimright of management provide motivation of internal control auditing.Finally, based on the above-mentioned theoretical and empirical conclusions, this thesis proposes some policy recommendations.