Study On Impact Of Managerial Power On Enterprise Internal Control Effectiveness

Enterprise internal control effectiveness has received extensive attention from academics and practitioners in recent years. More and more enterprises begin to pay high attention to the maintenance and improvement of internal control. However, with enhancing transparency of information, many internal control deficiencies have exposed. As the people in charge of enterprise internal control, managers play an important role in construction and maintenance of internal control. Then, it is easier for managers with high power to make a great impact on internal control. There is great uncertainty about the impact of managerial behavior on enterprise economic results, according to the different assumptions about human nature based on stewardship theory and principal-agent theory. From the aspects of CEO power and top management team(TMT) power, the thesis analyses the impact of managerial power on internal control effectiveness.The thesis reviews the related literature about managerial power and internal control effectiveness. Based on stewardship theory, principal-agent theory, upper echelons theory, managerial power theory, group faultlines theory, analytical framework of managerial power and internal control effectiveness is proposed. Then, the thesis does some empirical analysis of relationships between managerial power and internal control effectiveness from the aspects of CEO power and top management team power, by multiple regression analysis, principal component analysis, and moderator effect analysis. The results show that, in term of CEO power, high CEO power is helpful to enhance the effectiveness of internal controls. There is no relationship between CEO power and internal controls effectiveness in non-state-owned enterprises, while high CEO power is also good for the effectiveness of internal controls in state-owned enterprises. The high level of corporate governance can enhance the relationship between CEO power and internal controls effectiveness in state-owned enterprises. In the term of top management team power, the higher power of top management team increase the effectiveness internal controls, which is also applied to both state-owned enterprises and non-state-owned enterprises. The diversification of top management team power constitution is beneficial to enhance enterprise internal control effectiveness. However the group faultlines is bad for the relationship between the diversification of top management team power and enterprise internal control effectiveness. Finally, based on the conclusions, we propose the policy of increasing the diversification of top management team power constitution and improving the level of corporate governance.The thesis analyses the impact of the level and constitution of managerial power on enterprise internal control effectiveness, from the aspects of CEO power and top management team power. The study expands the research perspective of managerial power and enriches the upper echelons theory. While it also enriches the research between managerial power and enterprise internal control effectiveness. The results also provide theoretical basis for selecting managers, and distributing managerial power.