Research On The Relationship Between Quality Of Internal Control、 Media Supervision And Agency Cost

The discretion of the management agency cost will directly affect the rights and interests of owners and creditors and other stakeholders, which is also one of the important factors of efficient allocation of resources and economic benign development. The domestic and foreign researches on how to alleviate agency conflicts, reduce management agency costs although are a lot, but most of existing research focuses on the influence of the internal governance mechanism, ignoring that the company’s external governance mechanisms may have the effects on management agency costs, moreover, the research combined company’s internal governance with external governance mechanism is studied more than little. Therefore, this paper attempts to study the influence of the internal control quality and media supervision on the management agency costs from the perspective of internal and external governance mechanisms, in order to provide new empirical evidence on how to reduce the management agency costs.Based on the introduction of principal-agent theory and agency cost theory, asymmetric information theory and stakeholder theory of co-governance, the paper theoretically analyzed the impact on the management agency costs from the internal control quality and media supervision. Then, using5745A-share listed companies from year2008to2011as sample data, which established a single equation model and controlled the sample self-selection bias to illustrate the internal control quality and the media supervision’s effect on the management agency costs. Finally, this paper did further research on the different effects produced by the nature of media supervision. Empirical results illustrate:(1)The higher the quality of internal control is, the lower the cost of the company’s management agency costs will be. That is to say, the quality of internal control can reduce the management agency costs.(2)As one of the external corporate governance, media supervision has the function of reducing the management agency costs. However, under the background of different nature of property rights, the effects of the media supervision on reducing agency costs of management are different.(3)The quality of internal control and media monitoring have a complementary relationship in reducing management agency costs, which have more significantly influence on reducing management agency costs as well as protecting the interests of investors. Finally, based on theoretical analyze and the empirical results, this paper provides some suggestions about how to reduce the cost of management agency effectively by strengthening the understanding of internal control and attaching more importance to the governance role of media supervision.