Empirical Study On Family Business Governance Features On The Impact Of Effectiveness Of Internal Control

Since entering 21 st century, the internal control has been the research focus in the academia. Family business is the integration of the family system and enterprise system. Family enterprise governance structure has some certain particularity. The purpose of this paper is to study the family corporate governance characteristics impact on the effectiveness of internal control.In this paper, we select family enterprises which go public in 2012 in Shanghai and Shenzhen stock exchange as samples. By establishing plural regression model we try to do an empirical research on the characteristic of family corporate governance on internal control effectiveness. The results show that family firms parents authority and effectiveness of internal control has significant positive correlation; Levels of altruism and internal control effectiveness have significantly positive correlation; We didn’t find significant correlation between differential pattern and effectiveness of internal control; Other corporate governance variables, equity balance degree, executive compensation, the proportion of independent directors can effectively improve the effect of the execution of internal control; In addition, the lager the enterprise size is, the more effective internal control; The greater the financial leverage, the lower internal control effectiveness; Finally, the greater the degree of marketization, the greater the effectiveness of internal control.Further research shows that when business is at the initial stage of its development, that is to say, which is of simple organization, low profits, and with low levels of external market areas, parental authority, altruism, differential pattern and basically have no significant effects on internal control effectiveness. The empirical results show that when the enterprise are at the development stage of complex structures, high profit and high degree of marketization of external area, its research conclusion basic consistent with the whole sample data empirical research conclusions. Finally, based on the empirical research results, advices are given to improve the effectiveness of family enterprise internal control.