Research On The Impact Of Internal Control Quality On Executives’ On-the-Job Consumption

Under the modern company system,the separation of ownership and management rights increases the moral hazard within the enterprise,and at the same time,the adverse selection problem caused by information asymmetry makes it difficult for some managers to obtain return outputs that match the work input,and stimulates managers to make up for the lack of salary incentives through hidden means such as on-the-job consumption.As the internal control of the formal system of the enterprise,it can provide guarantee for the realization of the company’s goals and has a significant effect on the improvement of the corporate governance structure,so can it have a restraining effect on the abnormal on-the-job consumption of executives?In addition,with the development of the market economy,institutional investors have become an important force in the capital market to participate in the operation and management of enterprises,can its emergence open up new ideas for us to solve the problem of on-the-job consumption of executives?The answers to the above questions can provide empirical evidence for enterprises to alleviate the problem of entrusted agency and improve the level of corporate governance.This paper selects A-share manufacturing listed companies in China from 2014 to 2021 as a research sample,explores the impact of internal control quality on the on-the-j ob consumption of executives by constructing a multiple regression model,and introduces the nature of property rights and institutional investors as regulating variables in an attempt to clarify the impact of the two on the relationship between internal control quality and executives’ on-the-job consumption.The empirical results show that:(1)High-quality internal control can inhibit the on-the-job consumption and excess on-the-job consumption of executives.(2)Compared with state-owned enterprises,the effect of internal control quality on the on-the-job consumption of executives is more significant in non-state-owned enterprises.(3)Institutional investors play a negative regulating role in the relationship between internal control quality and on-the-j ob consumption,and when the quality of internal control is low,institutional shareholding has a more significant inhibitory effect on on-the-job consumption,and institutional investors have a substitution relationship with internal control.After dividing institutional investors into pressure-resistant and pressure-sensitive,it is found that it is mainly pressure-resistant institutional investors that play a negative regulating role in the relationship between internal control and on-the-j ob consumption.(4)In the further examination of the mechanism of internal control,it is found that in enterprises with low surplus quality,higher degree of tax avoidance and poor legal environment,internal control has a more significant inhibitory effect on on-the-j ob consumption.According to the research conclusions,this paper puts forward the following suggestions:in the process of continuously improving the on-the-job consumption disclosure system in the country,enterprises should not only pay attention to the design and operation of the internal control system,but also continuously optimize the management salary incentive mechanism and curb the opportunistic behavior of executives.In terms of external governance,maintain the independence of institutional investors,strengthen the external governance role of institutional investors,and jointly manage the issue of on-the-j ob consumption through internal and external cooperation.