Foreign Residency Rights,Internal Control And Corporate Frauds

Although private enterprise is an important strength to promote our national economic development after reform and opening-up policy,with inadequate laws,some private entrepreneurs utilize the relationship between the government and the commerce,even a few ones use improper means accumulate wealth in the process of development,so that formed the so called “original sin” problem.In the same time,with private entrepreneurs,China is suffering the third overseas immigration,more and more entrepreneurs attain oversea right of residence.Public opinion thinks,when facing laws and fame troubles through frauds,these ones are easier to leave the country to escape the legal sanction,then affect the stable development of listed company.It has important realistic meaning and theoretical significance to study whether private entrepreneurs can have an effect on enterprise development through immigration.This question is so critical to choose perspective and research method.The new progress of corporate governance enlighten the study.Its attention is turning from the scale of board of directors,independent director percentage to the manager's background characteristics(gender,age,financial experience,military experience,education background and political relation etc).Based on this,the text is focus on entrepreneur's background to analyze the relationship between entrepreneur(indicate immigrant or have immigrant intent)and enterprise fraud,internal controls.The thesis selects 2007-2015 private listed companies as study sample,search the database of entrepreneur oversea right of residence by manual,and according to the two questions to analyze the issue: first,how is the relationship between entrepreneur oversea right of residence and enterprise fraud: second,the ones whose controlling persons have foreign residency rights are more likely to inhibit the affect between corporate frauds and internal control.The results prove that : first,the ones whose controlling persons have foreign residency rights,their fraud is 2.64% higher than those not immigration,second high quality internal controls have a better inhibitory action on corporate fraud,when controlling persons have foreign residency rights.The innovation on this paper is extended and rich the research literature of corporate governance,especially the large shareholder's effect on corporate governance.The results of this study show that: in the transition period of China's economy,the actual control of private listed companies have the right to abode outside the company has a negative impact on corporate governance,but effective internal control can play a good inhibitory effect.Second,this paper makes use of the partially observable Bivariate Probit estimation method to study the relationship between the ones whose controlling persons have foreign residency rights and the company's violation.It makes up for the problem that enterprise violations but has not been investigated by the regulatory.It makes the results more convincing.