The Study On The Influence Of Internal Control Effectiveness To The Company Operating Stability

The substantive absence of internal control is an common problem existing in thedevelopment progress in domestic enterprises. Ever since the beginning of the21thcentury, the scandals from Enron Crop, Worldcom, Xerox and Merrill Lynch haveshocked the world and seriously destroyed the financial system of securities of theUnited Stated and the entire western world. The cases such as China Aviation Oil got ahuge loss in2004, Sichuan Changhong had an38billion bad debt on APEX, andHongsheng Huang of Skyworth was arrested by Hongkong ICAC sound an alarm to theinternal control of domestic enterprises.Numerous researches indicate that the validityof internal control has an important impact on the company operating stability.Thevalidity of internal control is the important means to guarantee the stability of companyoperation.Therefore, study the impact of the validity of internal control to the stabilityof company operation,which makes great practical significance to improve companyoperation.The validity of internal control is one of the most important conditions to decidecompany operation. This paper selects861main board companies from the Shanghaistock exchange in2010、2011、2012. According to the characteristics of the companyoperation, this paper selects a series of financial indicators to reflect the robustness ofcompany operation,plan ability, adaptation ability and risk management ability. Try toget a stability of company operation index value through the factor analysis method andstudy the influence of internal control to the company operation. The empirical researchshows that the key factors influencing the stability of company operation are the targetof internal control.Legal compliance of management is related with the companyoperating stability;The safety of assets is related with the company operatingstability;The reliable financial reporting is related with the company operatingstability;The good development strategy is related with the company operating stability.Therefore,we need to constantly improve the internal control structure, and thenimprove the company operating stability.We try to provide practical reference for the company pursuit stability in the fiercemarket, and give reference suggestions to improve the level of management of the company.