Directors' Overseas Experience And Corporate Internal Control Deficiencies

In the process of development,China's capital market has always paid attention to the construction and implementation of internal control,but it has also encountered many problems in the development process.The financial fraud and false accounting caused by internal control deficiencies are endless.High-quality corporate governance relies on high-quality boards,and the individual characteristics of board members are particularly important.Individuals with overseas experience are generally considered to have received a good education overseas and are more trained and have higher quality and ability.In recent years,the“influx of returnees”and the implementation of the national and local government brain gain policies have enabled a batch of overseas high-end talents to choose to return to China for development.In order to explore the contribution of overseas talents to the field of corporate governance after returning to China,this paper cuts in from the micro perspective of directors with overseas experience,explores its impact on the company's internal control deficiencies,and explores its roleBased on the imprinting theory,since the overseas political,economic,technological and cultural environment is significantly different from that of China,the experience of directors overseas will be "imprinted" on their cognition and ability.After they return to China,they will be affected by the influence of the previous imprinting effect,and those will affect the company's business decisions and corporate governance.As far as the subject of this paper is concerned,we theoretically speculate that overseas experience has changed directors' the perception and ability and thus affected the company's internal control deficiencies.Further,we propose three possible paths to explore the impact mechanism of directors with overseas experience to reduce the company's internal control deficiencies by increasing the professionalism of the audit committee,increase the diligence of the board and attracting analysts' tracking.In order to prove the above hypothesis,this paper takes the 2012?2017 Shanghai and Shenzhen A-share listed company as the research sample and uses the combination of normative and empirical research to test the hypothesis of this paper.The specific conclusions are as follows:(1)Directors with overseas experience are more likely to reduce corporate internal control deficiencies;(2)Directors with overseas experience reduce the possibility of corporate internal control deficiencies by increasing the professionalism of the audit committee;(3)Directors with overseas experience reduce corporate internal control deficiencies by increasing the diligence of board;(4)Directors with overseas experience attract more analyst's tracking further reduces corporate internal control deficiencies.In the expansion study,we first divided the directors with overseas experience on the board of directors into independent directors and non-independent directors.Secondly,we divided the overseas experience of directors into overseas study experiences and work experiences.Finally,we divided directors by the location of a country or region with a higher level of investor legal protection to study their impact on the company's internal control deficiencies.The specific conclusions are as follows:(1)Compared with independent directors,non-independent directors with overseas experience are more likely to reduce corporate internal control deficiencies;(2)Directors with overseas study experience are more likely to reduce than directors with overseas work experience corporate internal control deficiencies;(3)When the directors' overseas experience comes from a country or region with a higher level of investor legal protection,the effect of reducing corporate internal control deficiencies is more obvious.The research in this paper enriches the literature on the influencing factors of internal control deficiencies and the characteristics of directors' overseas experience,and provides evidence support for the national brain gain policy and the company's appointment of overseas high-level elitists.With the implementation of China's overseas high-level talent introduction policy,directors with overseas experience have gradually entered the field of vision.From the perspective of directors' overseas experience,this paper first explores the influence of individual characteristics of directors on internal control deficiencies and enriches the literature on the internal control deficiencies and the characteristics of overseas experience of directors;Secondly,this paper provides a reference for the rational introduction of directors by listed companies,especially the introduction of directors with overseas experience.Finally,this paper provides evidence support for the national brain gain policy and the company's appointment of overseas high-level talents.