Research On The Impact Of Management Equity Incentives On The Quality Of Internal Control

In recent years,the phenomenon of financial crisis about company is endless due to the failure of internal control,internal control theory has been the focus of many scholars around the world.From the global perspective,the internal control theory research and the system construction become mature gradually,the research of the internal control quality is also the most important,on the internal control quality influencing factors research,the related scholars have carried on the research from many aspects,such as the size of company,the ownership concentration,institutional investors holding shares.In addition,since the introduction of equity incentive model in China in the 1990 s,the equity incentive of listed companies in China has developed rapidly from the implementation to the system construction.However,due to the short time of introduction,the corporate governance effect still needs to be tested,there are few scholars analysis its impact on the internal control quality form the aspect of management equity incentive.Therefore,this paper will use this as the starting point to study its influence on the quality of internal control.The main contents of this paper are as follows.Firstly,the background of equity incentive and internal control is introduced,and then introduced the topic selection.and then review the relevant literature and articles from different angles and make a brief review.Then,The concept of internal control quality equity incentive and its method of measurement are defined,and the theoretical basis of management equity incentive is analyzed from the theory of principal-agent theory and residual claim theory.It also explains how the management equity incentive affects the quality of internal control of the company.On this basis,the paper puts forward the research hypothesis.By multiple linear regression analysis using to the data of 438 listed companies in the past 3 years we come to the research conclusion and the policy recommendations,the main conclusions are as follows:(1)Since the introduction of equity incentive mechanism in China,the equity incentive model have been put a high value by many listed companies of all ages,many companies began to actively use equity incentive measures.Its role in improving corporate governance levels is also paying off.(2)From the perspective of internal control quality,although supervision department and listed companies have begun to attach importance to the quality of internal control,However,the quality of the internal control of listed companies still needs to be improved,and the internal control system needs to be perfected.(3)Management equity incentive to improve the level of corporate governance and internal control quality has a positive effect,mainly in: the implementation of equity incentive can improve the company internal control quality;management holding a high proportion of state-owned listed companies within the quality of internal control better;state-owned listed companies internal control quality is significantly higher than non-state-owned listed companies.Based on the positive effect of equity incentive in improving the internal control quality of listed companies,this paper argues that listed companies should actively adopt and develop reasonable equity incentive plan to effectively encourage management,so as to alleviate the problem of principal-agent and improve the level ofcorporate governance.At the same time,we should strengthen the intensity of internal control information disclosure and disclosure quality,and further improve the internal control system;Secondly,Relevant regulatory authorities should develop and improve regulatory policies about equity incentive and internal control quality so as to its depth development.