Internal Control, Political Connection And Rent-seeking Corruption

In the 30 years of China’s economic transformation institutional background,government gradually out of the market,development of private enterprises continue to grow. However,the development of private enterprises has also restricted the legal system is not perfect and other institutional deficiencies.In order to alleviate hinder the development of enterprises system defects,private enterprises have established a political connection to get privileges,concessions,and promote self-development. For the enterprise it does have political connections "assist effect" :political connection as an alternative to an informal mechanism can reduce the system brought about by deficiencies hinder development,and can provide more tax incentives,financing concessions for enterprises.But at the same time,a means of political connection is also a government intervention to bring private enterprise "interference effect" :political connection bring the enterprise with government intervention,bear policy burdens,causing excessive investment,which will affect the long-term efficiency of enterprises.Private enterprises in the establishment of political connection,maintenance and development of political connection is often accompanied by rent-seeking activities and bring rent-seeking corruption.As an unproductive activities,rent-seeking is through bribery,lobbying,etc. reap excessive profits,the rent-seeking activities tend to generate rent-seeking corruption.Rent-seeking corruption, as a corruption abuse of power rent-seeking corruption,would reverse the allocation of social resources,reduce economic efficiency,hinder economic development,Academia on the prevention and control of corruption on rent-seeking mainly from the macro level,legal and political point of view,For example: improving the existing economic system,reducing or optimizing government intervention in the market economy,strengthen the punishment mechanism to enhance the opportunities for corruption and other rent-seeking costs.However,the internal control as a full participation,commitment control system healthy development of enterprises,there are few scholars to study its influence on rent-seeking corruption. I believe that business as a rent-seeking corruption in most government payer,through the internal control of its code of conduct to control greatly beneficial for the prevention and control of rent-seeking corruption.Using the data of China’s A-share private listed companies from 2010 to 2014,The political connection political connection is divided into categories of government officials,categories of represnetative members,in order to study the relationship between political connection with rent-seeking corruption, and internal control regulation for political connection,rent-seeking corruption.The study found: on the one hand, the establishment of political connection will increase the incidence of rent-seeking orruption, and the higher level of political association, the more rent-seeking corruption. Where government officials to establish class size and the strength of political association and rent-seeking corruption a significant positive correlation,but the representative members of the political class associated with less impact on the rent-seeking corruption. This is mainly due to the corporate executives rarely have the opportunity for seeking at the time to establish political connection of representative members,and ongoing maintenance costs low,but with the strength of the political connection of representative members,and its impact on the rent-seeking corruption continues enhancement; On the other hand,in the presence of politically connected private listed companies,the internal control can effectively reduce the corporate rent-seeking corruption.The empirical results show that the enterprise strengthening internal controls can significantly reduce the rent-seeking corruption which is generated with the establishment of political connection.This study interconnects with political connection, internal controls and rent-seeking corruption,researchs the influence of political connections on rent-seeking corruption,internal control regulation of the two,affirmed the importance of internal control mechanisms. Article not only innovative research on the prevention and control of corruption,affirmed the importance of internal control mechanisms,but also enrich the study of the internal control areas.