The Influence Of The Internal Control Of State-owned Enterprises Leverage

In recent years,China’s economic growth rate has been slowed down,and problems arising from the economic measures taken in response to the financial crisis have gradually emerged,one of which is the high leverage ratio of non-financial enterprises.Since the implementation of supply-side structural reform in China in 2015,the leverage ratio of enterprises has declined,but the leverage ratio still shows structural differences.The differentiation between state-owned enterprises and non-state-owned enterprises is obvious,and the leverage ratio of state-owned enterprises is high.Most of the state-owned enterprises are in the key fields and industries of the national economy and people’s livelihood,and they play a pivotal role in the national economic and social development.The existing literature mostly studies the factors that affect the leverage ratio of enterprises from the external perspective,while the internal control system can regulate the behavior of managers and avoid risks,which has a far-reaching impact on the leverage ratio of enterprises.Therefore,studying state-owned enterprises from the perspective of internal control is of great practical significance for coordinating the interests of all parties,optimizing the allocation of resources and maintaining the security of state-owned assets.This paper mainly studies the influence of internal control on the leverage ratio of state-owned enterprises.First of all,the research on the influencing factors of enterprise leverage ratio,the influence of internal control on leverage ratio,the role of government audit and the influence of deleveraging is combed.Then,selecting the data of central enterprises and central enterprise groups listed on Shanghai and Shenzhen main boards from 2010 to 2020,this paper makes an empirical analysis with the fixed effect model of control time and industry,and tests the robustness of the results.The results show that,in a certain range,the improvement of internal control quality can reduce the leverage ratio of state-owned enterprises,but this effect is heterogeneous in term structure.The short-term leverage ratio increases with the improvement of internal control quality,but the long-term leverage is more regulated by internal control.Because the government audit is not perfect and the enterprises are lucky,the government audit can’t substantially improve the internal control of enterprises,but can only achieve the effect of supervision and management in the short term.Therefore,the short term helps to reduce the leverage ratio of state-owned enterprises and the long-term effect is limited.Through further research,it is also found that the improvement of internal control quality can promote the deleveraging of highly leveraged enterprises.Finally,based on the above research and conclusions,some suggestions are put forward from the perspectives of enterprises and governments.Enterprises should improve the quality of internal control,pay attention to managing debt structure,strengthen the internal motivation of implementation,and establish an internal control evaluation system.The government should increase the intensity and frequency of audit supervision,and more importantly,deepen the reform of financial system and build a long-term market financing system to promote the deleveraging of state-owned enterprises.