Enterprise Internal Control And The Inefficient Investment Study

Investment behavior of enterprises will affect the smooth operation of the capital market. However, in our country, many enterprises, especially state-owned enterprises have the phenomenon of inefficient investment and causing business losses, interest in the issue of violation of shareholders and other economic scandals. Currently, inefficient investment has become an important factors that hinder business development, domestic and foreign scholars in how to avoid inefficient investment behavior of enterprises actively explore the research, and the internal control in the enterprise plays an important role in governance mechanisms, some thesis have proved this view, and had empirical test.Now investment efficiency of China's companies generally is not too high, and low efficiency of investment projects is rising, inefficient investment for the management and major shareholders have the opportunity against the interests of small shareholders. In theory, good internal controls can help companies choose good investment projects, reduce moral risk managers to further improve investment efficiency. But the relationship between internal control and efficiency of investment, there is still much research space. This paper studies the speculation scandal case,two years ago shocked the world occurred in China Aviation Oil Singapore, where the headquarters of China Aviation Oil Singapore company without permission, they change their business strategy, invest heavily in the futures market, in high-risk options trading in oil derivatives, oil price movements miscalculation, leading up to the final business suffered huge losses of $550 million, becoming the largest bank failure since Bahrain speculation scandal. Direct cause of China Aviation Oil (Singapore) from a profitable enterprise and finally embarked on the road to bankruptcy is a derivative transaction fails, but we found oil derivatives trading Aviation Oil (Singapore) management authorities have not been completely allowed and is a serious violation,the headquarters not detect and stop this serious and even lead to inefficient investment bankruptcy, the company is clearly evident both internal control internal control failure. We use COSO committee "overall framework of internal control" as the basis for analysis, using qualitative analysis of case-based analysis of the existing literature review to collate and conducted a logical reasoning.The event warned us, although state-owned enterprises listed overseas can have a good external monitoring system, but only can improve their own internal control system, in order to fundamentally improve governance system to promote the healthy development of enterprises and stable development.This article study the reasons why that event occurred, further validates the effective internal control can be suppressed enterprises inefficient investment. Internal control and corporate efficiency of investment relations put forward new ideas and give recommendations accordingly.(1) In this paper, in terms of classical economics, neo-classical economics and institutional economics literature analyzed the efficiency of investment companies, has information related to past literature from the perspective of conflicts of interest within and outside interests among stakeholders who are not among Perspective symmetrical internal control and the intrinsic link between investment efficiency, the proposed ultimate goal of building a company's internal control and foreign investment is consistent with the purpose of deepening the theory of internal control(2) internal control and investment efficiency relations, interact and effective internal control system must take into account to improve the efficiency of investment, means and measures to enhance the efficiency of investment in turn reflects the internal control system to improve;(3) the five elements of internal control can be used to analyze how to improve investment efficiency. Coordinated approach to improve the internal control itself is business efficiency take effect, procedures, policies and measures, and investment efficiency is an important measure of business performance. (4) In the "internal control" state-controlled listed companies, internal control is likely to be used by some executives, these people become "self-serving" behavior.Effective internal controls on corporate investment efficiency has a positive effect. Based on this, on the "China Aviation Oil incident" from the point of view of internal controls to verify because its internal control failure caused the final investment bankruptcy. Of course, the current level of internal control of listed companies is still not high, and most of the listed companies on the lack of attention to the internal control, emphasis on the construction of internal control is not high, resulting in internal control system of listed companies can not fully play its role of the company's investment decision-making process of governance can not play its due role. To use the Enterprise scientific and rational investment decisions and avoid investment mistakes, and improve investment efficiency, while accelerating the internal control system of listed companies and improve the mechanism to enhance the overall level of internal control, the paper said:(1)control environment is the cornerstone of support listed companies. Excellent control environment to ensure that every investment project company can undergo a rigorous screening and evaluation of the decision-making procedures to ensure the implementation of strict project control project running, timely analysis and evaluation.(2) risk assessment. With the increasingly fierce market competition, the risks faced by the company is growing, management should strengthen risk awareness, risk control as an important part of internal control procedures, risk assessment and prevention should be managed as a business daily work.(3) in the project during the operation, a timely project compared with the planned operation, strengthen the supervision of the project.(4) because of the many other stakeholders do not know some information, managers can make inefficient investment decision,Therefore, the establishment of good information and communication mechanisms to ease internal and external information asymmetry, information disclosure and the importance of internal transport system in the company's daily operations, improve management efficiency and establish a good corporate image;(5) strengthen internal and external supervision. A full range of strict supervision of listed construction company's internal control system, according to the usual business enterprise internal control oversight system, strengthen supervision and inspection of government regulators.