Research On The Influence Of Quality Of Internal Control On Inefficient Investment

It is a thorny problem for company to search for new sources of economic growth, as well as to improve profitability and make itself grows healthily and rapidly in this circumstances that have a slowdown in economic growth called "the new normal". Taking the investment is an engine of rapid economic growth into consideration, only the companies make efficient investments, can they win in the keen competition. However, many companies exist the non-efficiency investment problem, which actually influenced by many complex factors, like the asymmetry between agency and information etc. This is harmful to the company’s own development as well as the efficiency in the usage of funds. Therefore, it has been a practical question evolved into a business or even the whole society that needed to resolve urgently on how to avoid the non-efficiency investment to ensure the effect of investment. Generally speaking, it is meaningful to research on the internal control of the company to settle the problem stated above for high quality of corporate governance, especially its internal controls can be good to improve the efficiency of investment, and reduce inefficient investment. In this paper, based on A shares on the main board of listing Corporation in Shanghai’s and Shenzhen’s in 2011-2013 years, we focused on the construction of internal control evaluation index in view of the perspective of corporate governance and the effect the internal control quality making on the inefficient investment by the methods of normative research and empirical research. The main contents and results are as follows:Firstly, we selected the indicators that can reflect the internal control objectives, subject and auditing from the perspective of corporate governance to evaluate the internal control comprehensively. We found that the internal control construction of China’s listing Corporation increased gradually, which did not change the situation of poor quality of internal control though building internal control evaluation index model and collect the sample date.Secondly, we discussed the mechanism of non efficiency investment impacting on the company’s internal control based on the principal-agent theory and asymmetric information theory and measured the efficiency of investment using the Richardson model. Besides, we divided the non efficiency investment into "excessive investment" and "insufficient investment", and further utilized them and the internal control as the explanatory variable to construct the multiple regression model in order to support the empirical research of the internal control effecting on non-efficiency investment. The results showed that: the internal control could significantly inhibit the insufficient investment, but had less effect on the excessive investment.Finally, combined with the theoretical analysis and empirical results to improve the quality of internal control in view of corporate governance, we proposed the corresponding countermeasures and suggestions listed as follows: ①Strengthen the external audit and supervision and set up the audit committee to improve the internal audit system; ②Ameliorate the company’s internal environment and optimize the structure of corporate governance; ③Enhance the information systems’ construction and improve the quality of the internal control of the company.