Empirical Research On The Effectiveness Of The Internal Control Environment Of Internal Controls

After the enactment of the Sarbanes-Oxley Act in2002, how to realize betterinternal control had attracted universal attention in accounting academia, the results hasgained generally recognization in the world, but when the scandals of Enron and otherbusiness appeared gradually, internal control system continues to be critical. The mainreason is that, despite the internal control system had been designed, but it did notexpected internship effectiveness, the results were not ideal. In2008, China issued《Internal control basic norms of the enterprise》,which to be the guidelines for theinternal control of the country, marking Chinese internal control system of norms hadbasically completed. As a basis for internal control,internal control environment hasmuch effective in the implementation of internal control.The introduction of internalcontrol guidelines in2010in China provides opportunity for this study.As a basis for internal control, improving the internal control environment playsan important role in today’s market environment for ultimately maximizing the value ofthe enterprise. Internal control environment affects the internal control implementationof cognitive in promoting the formation of the internal control function. Only internalcontrol give full play to their effectiveness, it can realize its value in businessmanagement, prevent vulnerabilities in enterprise management, avoid corrupt motive,prevent errors and reduce the risk to maintain a smooth and orderly management of thebusiness, and provide a basis for the internal and external audit. Internal control shouldgive full play to the effectiveness of the management process to realize its value,therefore, on the basis of the theory, focusing on the effectiveness of internal control,this paper uses a combination of theoretical and empirical methods to study how theinternal control environment affect the play and answer to how to optimize thecompany’s internal control environment, and ultimately improve the effectiveness ofinternal control.In the part of the theoretical analysis, this paper first reviews the research status offoreign and domestic internal control environment and the effectiveness of internalcontrol, followed by the environment and the effectiveness of internal control beingdescribed and defined. Empirical part of the article, this paper gives six majorassumptions of the company’s internal control environment affect internal controlling onthe basis of the analysis of the theoretical part and selects company data on theShanghai A shares from2009to2011, on this basis, removes in the following order samples:(1) excluding the finance and insurance industries listed companies;(2)weeding out*ST, ST, SST beginning with abnormal Company;(3) eliminating dataanomalies listed companies;(4) excluding the incomplete data sample. Using SPSS16.0and EXCEL software for statistical analysis and multiple regression of the data obtained,and the final results support most of the assumptions. The size of the executive team,management fees, the stake of the largest shareholder, corporate social responsibilityand corporate incentives have an important impact on the effectiveness of internalcontrol, played an important role in the effective implementation of and internal control.Empirical analysis of the results, the paper proposes the following policyrecommendations:1, appropriate to expand the corporate executives of scale, enterprisemanagement costs reasonable control;2, to prevent the equity imbalance, give attentionto the construction of the board of directors and board of supervisors;3, to improvecorporate social responsibility, enhance corporate social responsibility informationdisclosure;4to improve the pay incentives to promote the efficiency of the internalcontrol.