Research On The Impact Of Equity Incentive On Internal Control Quality Of Listed Companies In China

After a series of management and financial scandals of listed companies, internal control has aroused attention from the academia and theory field in China and abroad. From the perspective of world, internal control system has been improving increasingly, Domestic and international experts and scholars has conducted researches successively demonstrating the effects of corporate governance, corporate characteristics, audit committee and other factors on internal control quality. However, few has considered the influence of equity incentive on internal control quality from the perspective of “people”- subjects of internal control.On the theoretic basis of “The Principal-agent Theory”, “Convergence Theory of Interests”, this paper establishes internal control quality comprehensive evaluation system, taking listed companies of Shanghai and Shenzhen from 2013 to 2014 as research object, This research use the realization degree of operation goals, financial reports goals, legal compliance goals and asset security goals to measure internal control quality, then by using the way of principle component analysis of multiple variable, this paper reform an aggregative variable which is represent internal control quality. Empirically verifying whether equity incentives has impact on internal control quality. Then it uses the proportion of the stock number to be granted and shares outstanding of listed companies as the symbol of incentive intensity, verifying the effects of incentive intensity on internal control quality.Through the empirical test, this paper concludes that the internal control quality of listed companies implementing equity incentive plans are better significantly than those are not; internal control quality of listed companies implementing higher degree of equity incentive plans are better than the lower. Namely listed companies with high proportion of the stock number to be granted by equity incentive plans and shares outstanding have better internal control quality.