Study Of Effectiveness Of Internal Control On Enterprise Value

In recent years, the internal control has become a hot issue at home and abroad. Inaddition, to maximize corporate value has always been one of the goals of businessmanagement. In theory, companies’ trying to improve internal controls is also for the ultimategoal of maximizing corporate value. There is a definite link between the two. So, in practice,specific to the automotive manufacturing industry and how the effectiveness of internalcontrols affect the value of it? This study is to focus on how the effectiveness of internalcontrol issues affect corporate value.Firstly, this paper introduces the concept of internal control and corporate value. Thetheoretical analysis are borrowed from previous research results.And then, according toprincipal-agent theory, theory of value management and risk management theory, the paperanalyzes the link between internal control and corporate value respectively from the internalcontrol objectives and internal control overall, which provides a theoretical basis for the studyof this paper.In the empirical analysis part, first of all, from the results of the implementation ofinternal control, according to the characteristics of the auto industry to build the evaluationsystem of the internal control effectiveness, using the factor analysis method to get thecomprehensive scores of internal control effectiveness. And then, this paper selects theautomobile manufacturing industry of the A-share market in China in2010-2012as a sample.The explanatory variable is calculated by factor analysis of the effectiveness of internalcontrol composite score, and the dependent variable is the enterprise value, selecting theownership concentration and firm size as control variables.Through descriptive statisticalanalysis and regression analysis, we obtained the research conclusion. The conclusions of thestudy are: the effectiveness of internal control has a significant positive impact on theenterprise value, which consistent with the hypothesis of this paper.The main innovation of this paper are: Firstly, this paper starting from the results of theimplementation of internal control and on the basis of forefathers’ research to increase theproportion of r&d expenditure, the proportion of scientific research personnel, cash flow pershare, fines proportion of expenditure, etc in the construction of internal control effectiveness evaluation system; Secondly, based on automobile manufacturing industry as the researchsample, this paper explores the internal control effectiveness in specific industry’s impact onthe enterprise value.