Research On The Impact Of Executive Power On The Effectiveness Of Internal Control In Listed Companies

Since the Sarbanes-Oxley Act,more and more companies are aware of the importance of internal control.Perfect internal control system is conducive to enterprises to avoid business risks,improve business performance.The China's government has also issued a series of rules and regul ations to regulate the internal control of enterprises.The rules alleviate the problem of internal control to a certain extent,but it does not completely eliminate the problem of internal control.Some enterprises still exist financial fraud cases due to internal control failure caused,such as Huayuan Group,Kelon Electric and so on.In order to curb corporate financial fraud,protect the legitimate rights and interests of the majority of investors,and strengthen the internal control of enterprises without delay,improving the quality of internal control has been the focus of domestic and foreign scholars.The main designers and performers of the internal control system are senior management personnel.Their behavior decisions have a significant impact on the effectiveness of internal control.While the behavioral decision of the senior management is affected to some extent by its background characteristics,especially its power characteristics.Therefore,it is of great practical significance to study th e effect of executive power on the effectiveness of internal control and to improve the effectiveness of internal control.On the basis of the relevant research at home and abroad,through the analysis of entrenchment theory and top echelon theory,it can be seen that the power of enterprise executives in different aspects have an important influence on their decision-making behavior.These decision-making behaviors will impact the effectiveness of internal control.Also,It is necessary to study the mecha nism of this power characteristics on the internal control mechanism.This paper constructs the scientific internal control evaluation index system,measures the internal control effectiveness of the enterprise,and compares the internal control evaluation index calculated by this paper with the internal control index issued by the professional organization.It is as the dependent variable of the study.This paper chooses the educational background,duality,tenure,ownership status,and the quality of external audit as independent variables.The model of the influence of CEO power on the effectiveness of internal control is constructed,using the personal data and financial data of the listed companies from 2013 to 2015,and analys ing the regression results.The study found that the CEO's power in different aspects effects the internal control.CEO's duality will have a significant positive effect on the quality of internal control;CEO's shareholding ratio and external audit quality will have a significant positive effect on the quality of internal control;CEO's tenure and academic level of the two variables on the quality of internal control is not significant,but the CEO's academic level and duality can create an interaction that the interaction weakens the effectiveness of internal controls.Therefore,enterprises should use equity incentive means,and pay attention to the quality of the company's external audit.