Research On Relationship Between The Internal Control, Unproductive Expenditure And Business Productivity

The presence of non-productive activities tend s to usurp the reso urces that the enterprises used on normal production and operation, and influences resources’ optimization. While the enterprise increasing non-productive activities,the enterprise managers will put in too much energy on speculation such as renting.AS a result, the enterprise managers will reduce attention on production and management and reduce the company’s production efficiency. So this is a very worthwhile research topic about how to reduce non-productive expenditure and reduce transaction costs. The government and relevant agencies encourage enterprises to establish and perfect the internal control but many companies do not really understand the importance of internal controls. Many companies also make deep concerns about the large pre-construction costs of internal control. This article combines internal control with unproductive expenditure to investigate the correlation between the two, and the impact on business productivity.This paper selects the data of the listed companies form 2011 to 2014 as the sample and the Dibo Internal Control Index as a measure of internal control indicators. In addition to this, the paper also study the impact internal control had on the unproductive expenditure basis on ABHJ(2006) model. And reference Li Jie Yu and Jiang Shu Yun(2009) for the number of the Cobb-Douglas production function, with its equation to measure the residual business productivity. The result of the research indicates that internal control has a negative effect on non-productive expenditures, has a positive effect on the production efficiency. The impact that internal control has is more notable in non-state-owned enterprises than state-owned enterprises, while the impact that internal control has is more notab le in enterprises of high competition than enterprises of low competition.Chinese scholars start research on internal control mostly from the angle of deficiencies and evaluation, and research on firm performance is mostly bound by theory while lacking of data argument and the way’, the mechanism of the impact. Thus, the present study to explore the affect that internal control has on non-productive expenditure, and if their interactions affect have the final action on productivity. This can make up for lack of theoretical research on the present.