Internal Control、Legal Background Executives And Corporates’ Compliance Goals

The frequent financial fraud cases caused the attention of regulators. The "enterprise internal control basic norms " issued by the five departments in China in 2008 provides guidelines for the internal control of the company. The internal control has five goals. In order to study whether the internal control can promote the realization of the company’s compliance objective, this paper selected the Shanghai and Shenzhen A-share listed companies of non financial listing Corporations from 2010 to 2014 as a sample of research. After the sample selection and data collation, this paper finally obtained 1446 companies per year as the research object. In this paper, the company’s legal compliance objective was explained variable. At the same time, the measurement was carried out by two dimensions of times and probability, the company’s internal control quality and the company’s Legal background executives are the Explanatory variables. This paper also controls the proportion of the company’s largest shareholder、size of the company the asset liability ratio, the controlling shareholder’s tunneling, the big four accounting firms, the company losses and time to market. Finally, the data were analyzed with EViews software.The conclusion of this paper include the following points:(1) The better the quality of internal control of the company, the lower of the number and the probability of company violates the legal compliance goal.(2)The more the company’s Legal background executives, he lower of the number and the probability of company violates the legal compliance goal. Internal control is a process, which can not be separated from the participation of personnel. In this one, senior managers play a decisive role, the senior management personnel with professional knowledge can bring benefits to the company with their own literacy, promote company legal compliance, to lay the foundation for the company to achieve strategic objectives. Due to the lag of policy may be on. This paper also into a verified the company has a legal background with more senior, the company next violation of legal compliance target number and the probability is low. (3) Of the Control variables, the higher the proportion of the first largest shareholder, the more healthy the company’s operating condition, the lower the number and the probability of the company in violation of legal compliance objectives. The lower of the company’s asset liability ratio, the lower the proportion of large shareholders, the number of Companies in violation of legal compliance and the probability of target is low. And the size of the company, whether the company’s four major accounting firms audit and the company’s listing time is only to a certain extent, and the company in violation of legal compliance objectives negatively related. The regression results of the above control variables show that the daily operation of the company is the most important, the external such as scale and time to market is the external performance of the company’s production and operation.