دانلود رایگان مقاله انگلیسی کیفیت کارکنان، محیط نظارت و کنترل داخلی - الزویر 2017

ABSTRACT

We investigate the effect of internal control employees (ICEs) on internal control quality. Using special survey data from Chinese listed firms, we find that ICE quality has a significant positive influence on internal control quality. We examine the effect of monitoring on this result and find that the effect is more pronounced for firms with strict monitoring environments, especially when the firms implement the Chinese internal control regulation system (CSOX), have higher institutional ownership or attach greater importance to internal control. Our findings suggest that ICEs play an important role in the design and implementation of internal control systems. Our study should be of interest to both top managers who wish to improve corporate internal control quality and regulators who wish to understand the mechanisms of internal control monitoring.

Conclusions

Our study examines the relationship between ICE quality and internal control quality, and the effect of monitoring on this relationship. Based on the input-process-output theory and agency theory, we argue that high quality ICEs increase the human capital investments in the design and implementation of internal control process, thus increasing internal control quality. Furthermore, effective monitoring can alleviate the agency problem between top managers and employees and further improve the positive effect of ICE quality on internal control quality. Using special survey data from Chinese listed firms, we find that ICE quality has a significant positive influence on internal control quality, and this positive effect is more pronounced for firms in a strict monitoring environment. In particular, we find that the positive effect is more significant when firms implement CSOX, have higher institutional ownership, or attach great importance to internal control. Our results are robust to the misreporting problem of internal control weaknesses, endogeneity bias and chairman turnover. Our research not only complements the literature on internal control and employee agency problem in theory, but also has important implications for practical corporate decisions on ICE allocation and monitoring. A fruitful extension of our research would be to investigate the paths and mechanisms through which ICEs influence internal control quality. Such analyses would help to develop a clearer picture of the functions of ICEs.