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Managerial ownership and the effectiveness of internal control

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  • Liu, Yanmei

Abstract

This paper examines the impact of managerial ownership on the effectiveness of internal control in China's stock markets, focusing on the perspective of managerial ownership. The findings reveal a significant quadratic non-linear relationship, characterized by an inverted-U shape, between the level of managerial ownership and the effectiveness of internal control for the overall population of listed companies. Notably, the inverted U-shaped effect of managerial ownership on internal control is observed to be more delayed in non-state-owned listed companies. However, these companies exhibit a stronger incentive effect, and the 'Entrenchment Effects' become apparent at an earlier stage.

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  • Liu, Yanmei, 2023. "Managerial ownership and the effectiveness of internal control," Finance Research Letters, Elsevier, vol. 58(PA).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323007110
    DOI: 10.1016/j.frl.2023.104339
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