Research On The Effects Of Board Characteristics And Internal Control Effectiveness

With the economic globalization and the internationalization of capital overall development trend, China’s economy is rapidly growing and enterprise system is continually improved. Establishing a sound internal control system in the enterprise will help companies to achieve the goal of efficient management. There are many factors influencing internal control. This article mainly from the perspective of the board characteristics, researched the validity of the internal control. Research on the relationship between the effectiveness of internal control and the board characters make the continuous optimization and innovation of management methods, and to further improve their internal control systems. Firstly, this paper has listed the present and the past situation of internal control of companies both here and abroad, identifying the main research directions. Then explain and point out the concept of board characteristics, internal control, corporate governance and the method to measure the effectiveness of internal control. The article put forward four points of related basic theory.Respectively, the principal-agent theory, contract theory, stakeholder theory and resource dependence theory. On the basis of these theories, put forward hypotheses and research model was constructed using empirical analysis method to study the board characteristics affecting the effectiveness of internal control. In this paper, adopt the data of 2012-2014 in some listed A-share Chinese companies, a total of six explanatory variables, three control variables, using descriptive analysis, correlation analysis and regression analysis. The results for the size of the board, the number of board meetings held, the effectiveness of the Board of Directors stake are positively correlated with the internal control. Board member of a higher proportion of independent directors and the position divided into two jobs of chairman and general manager will help to improve the effectiveness of internal controls. Fourth Committee under the Board of the number and the effectiveness of internal controls related negatively. Finally, based on the empirical results, features on the board level, the paper proposed some recommendations to improve the effectiveness of internal controls and measures, pointed out the limitations of the study and make the relevant prospects.