What Makes an Effective Internal Control？

• Main Authors: Shih-Yu Yang, 楊適伃
• Other Authors: Wei-Heng Lin
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/29350883372907513601

碩士 === 中原大學 === 會計研究所 === 96 === Recent enterprise's financial distress, embezzlements and fraudulent financial reporting make the importance of corporate governance and internal control system appear on the stage. The emergences of the frauds result from the enterprises’ not implementing the effective internal control. The authorities responded with "Regulations Governing Establishment of Internal Control Systems by Public Companies" in 2002. This study explores the determinants of effectiveness of internal control. The sample is gathered from prospectus of listed company during 1998 to 2006. We classify the internal control weakness into trade-cycle control related, management control system related and computer-based information system related weakness. The determinants are related to these three major types separately. The empirical results show companies with longer year of establishment, higher product diversification, and lower firm performance are associated with internal control weakness. The larger firms will have the better internal control. Corporate governance related factors show that CEO duality, and high director ownership are positively associated with internal control weakness, and the big board size, high ratio of independent directors and supervisors, and engaging big 4 will lead to a good control environment.