The Impact Of Control Transfer On The Quality Of Internal Control In State-owned Enterprises

Mixed ownership reform is an important form of state-owned enterprise reform,which can affect the operating efficiency and governance efficiency of enterprises.In particular,the form of transfer of state-owned control rights may not only have a positive effect on the operating performance and governance efficiency of restructured enterprises,but also bring more negative effects such as controlling private interests or inhibiting management efficiency.This paper defines the transfer of state-owned control rights as the change of the nature of the largest shareholder or actual controller of state-owned enterprises.Based on the data of state-owned listed companies in Shanghai and Shenzhen A-share non-financial industries from 2009 to 2021,the internal control index disclosed by DIB database is used to measure the internal control quality of listed companies.Statistics show that the internal control quality of restructured enterprises in the three years after the transfer of state-owned control rights is superior to the decline effect of the base period,but the number of internal control quality increases compared with the base period is not small.Based on the principal-agent theory,modern property rights theory,control market theory,stakeholder theory and equity incentive theory,this paper identifies the listed companies with the transfer of state-owned control rights.Based on the characteristics of the reformed enterprises and the direction of internal control quality changes,this paper selects Jinyuan Co.,Ltd.,Skyworth Digital Co.,Ltd.,Ruyi Group Co.,Ltd.,Chongqing Beer Co.,Ltd.,Dashang Co.,Ltd.and Dalian International Co.,Ltd.as research cases.Based on the theoretical mechanisms of non-state-owned controllers ’ tunneling motivation,short-sighted interests and executive compensation performance sensitivity,case analysis is carried out.It is found that the internal control quality of the restructured enterprises with improved scale and management level after the transfer of state-owned control rights is correspondingly improved,while the internal control quality of the restructured enterprises with reduced scale and reduced management level is generally difficult to be guaranteed.There is a positive correlation between the sensitivity of executive performance pay and the quality of internal control.If the sensitivity of monetary pay performance or performance equity is high,executives are more motivated to promote the construction of internal control and improve the quality of internal control.The case analysis shows that there is indeed a tunneling behavior of non-state-owned controllers in the reformed enterprises.The more serious the occupation of funds by major shareholders and the non-operating funds of the company,the more significant the internal control quality of the reformed enterprises will be reduced.The short-sighted interests of non-state-owned controllers also exist in some reformed enterprises,and the short-sighted interests will have a negative impact on the quality of internal control.Based on the above conclusions,this paper puts forward the following suggestions : Firstly,the government should screen the transferee from the source,and select the transferee with compliance management,good financial status and good development prospects.The second is to implement the commitment of internal control construction of restructured enterprises and strengthen internal control construction and behavior supervision.Thirdly,strengthen executive monetary compensation and equity incentives within a reasonable range,and build a community of interests.