Features Of Chairman,Internal Control And Over-investment

As one of the most important financial activities,investment is very crucial for the company.A good investment project can provide new sources for the company.However,at present,overheated investment and overcapacity are very common in companies,which make the waste of resource more seriously.In rescent years,with the improvement of corporate governance system,internal control has drawm more and more attentions.Internal control is a comprehensive system,which covers many aspects of company management.It is the core issue of corporate governance.Accordingly,it is meaningful for the controling of over-investment to improve the internal control system.The chairman as the leader of the company is so important that he can even influence the direction of the company.The Upper Echelons and Checks and Balances Theory tell us,chairman's decions can reflect some features of them.Considering that,listed companies have internal control systems,which affect every member of the company,it is necessary to combine the features of chairman,internal control and over-investment to research the mediating effect of internal control.Firstly,the paper combed relative articals about the features of chairman,internal control and over-investment.By summing up those findings,the author found that there were many articles about the relation between chairman's features and internal control,chairman's feature and over-investment,as well as internal control and over-investment.So this paper combines those three variables together.Secondly,according to Upper Echelons Theory and other theories,we make four parts assumptions and models.We selected five years data from 2010 to 2014 to make empirical tests.Finally,we came to the conclusions:(1)Among those different features,the age and tenure of chairman have negative relevant relation.Duality of chairman and general manager has no significant effect on over-investment.(2)Different features influence internal control differently.The relation between age and internal control is positive,which is the same to tenure,while there is negative correlation between dual and internal control.(3)Internal control can obviously inhibit over-investment.Companies with higher quality internal control tend to have more effective investment.(4)the mediating effect of internal control.In the study of age and tenure of chairman,internal control has mediating effect.However,the variable of dual did not pass the significance test.At last,in view of the mediating effect of internal control,we suggest that companies should pay much attention to it and enhance the constrction of internal control system.