Transformations  in
Business & Economics

CAN PROFESSIONAL EXPERIENCES OF EXECUTIVES IMPROVE CORPORATE INTERNAL CONTROL EFFECTIVENESS? DISCOVERY BASED ON AGRICULTURAL LISTED COMPANIES IN CHINA⁸
Tao Tian, Xiaoning Li, Qing Wang, Yujing Shen, Qian Li

ABSTRACT: Amid the frequent internal control failures, agricultural listed companies in various countries have endlessly experienced financial frauds. These frauds have seriously impacted the core competitiveness of agricultural enterprises among global enterprises. To mitigate the unique poor internal control of agricultural enterprises effectively, panel data of Chinese agricultural listed companies from 2010 to 2020 were combined with the fixed-effect model to empirically examine the influences of executives’ five professional experiences (agricultural, political, financial, overseas, and academic experiences) on the effectiveness of their internal control based on upper echelons theory and imprinting theory. Results show that the agricultural, political, overseas, and academic experiences of executives can improve the effectiveness of internal control in agricultural listed companies. Furthermore, the financial experience has an opposite effect. Corporate social responsibility is an important avenue for executives to showcase their professional experiences, which can subsequently support the effectiveness of internal control. Compensation incentive and board independence present significant regulating effects on the relationship between executives’ professional experiences and the effectiveness of internal control. The obtained conclusions provide a significantly decision-making reference for agricultural listed companies to allocate human resources reasonably according to industry characteristics, optimize the management layer structure, and exert a good governance effect by taking full advantage of executives’ differential professional experiences.

KEYWORDS:  professional experiences, internal control, executive, corporate social responsibility.

JEL classification:  Q13, M12, D22, G32, C33.

⁸Acknowledgments:  This study was supported by the Provincial Science and Technology Plan Project (Grant No. 202106f01050017) & the Scientific Research Project of Provincial Department of Education (Grant No. SK2019A0132).