A Study On The Impact Of Executive Change On Budget Evaluation

With the use of management accounting in the enterprise,the functions of the budget in the enterprise have also been developed continuously.In 2003,the State-owned Assets Supervision and Administration Commission of the State Council examined and adopted the "Interim Measures for the Assessment of the Performance of the Central Enterprise",clearly stipulates that the SASAC will use the budget method of state-owned enterprise executives to conduct annual business performance assessment and their term performance assessment,and the results of the assessment as an important basis for appointment and removal of corporate executives.Since then,the budget has become an important way of enterprise performance evaluation.In the moment,not only the budget,the impact of internal control on the enterprise is more and more popular.However,the assessment of the budget under the influence of internal control is still worthy of our attention,especially now the various scholars for the impact of internal control to the enterprise research is not very consistent.The internal control bring the benefits for the enterprise at the same time with the cost.There is little research on how the internal control has led to the failure of the budget evaluation function.From the perspective of internal control,study the relationship between executive change and budget,so as to determine the budget evaluation function,and then join the internal control of the cross,study the impact of internal controls on budgeting evaluation.Based on the theories of "Principal-agent theory","Information asymmetry theory","Incomplete contract theory" and "Transaction cost theory",the basic theoretical framework is formed,and then the relationship between internal control,executive change and budget evaluation is analyzed theoretically,and four hypotheses are put forward.All the companies listed on the A-share market in China are the research objects,collect relevant data,make variable definitions,build the model,and then use the Stata software to carry on the empirical test,carries on the verification to the four hypothesis,finally analyzes the empirical result to draw the conclusion.The study shows that:(1)The budget has gradually become a means of performance appraisal,executives change and the budget is a negative correlation between compliance,If the company executives change next year,the corporate budget is not likely to be completed.(2)The internal control can reduce the cost of existing agents,so that enterprises at a lower cost of financial and non-financial information delivery more accurate and timely,so as to complete the goal of the budget.That is,internal control can improve the efficiency of budgeting implementation.(3)Based on the completion of the budget will affect the management's appointment and removal decisions,these executives in order to maintain their own interests through budget slack to achieve the budgeting target.With the effectiveness of internal control increases,corporate information becoming more transparent between contract parties,also reducing the cost of the contract.These executives cannot distort information and the possibility of renegotiating is reduced,thus reducing the chances of agents to negotiate afterwards.Then in the process of preparing budget goals,executives will actively engage in prior negotiations,so as to benefit their own interests.Therefore,with the improvement of the effectiveness of internal control,the company's budgeting relaxation will be more serious,the executives will set lower revenue budget targets,making budget execution easier to meet.The effectiveness of internal control undermines the relationship between executive change and budget evaluation,and the budget evaluation function is invalid.