企业内部治理外文文献翻译

会计内部控制中英文对照外文翻译文献(文档含英文原文和中文翻译)内部控制系统披露—一种可替代的管理机制根据代理理论，各种治理机制减少了投资者和管理者之间的代理问题（Jensen and Meckling，1976； Gillan，2006）。

传统上，治理机制已经被认定为内部或外部的。

内部机制包括董事会及其作用、结构和组成（Fama，1980；Fama and Jensen，1983），管理股权(Jensen and Meckling，1976)和激励措施，起监督作用的大股东(Demsetz and Lehn，1985)，内部控制系统(Bushman and Smith，2001)，规章制度和章程条款(反收购措施)和使用的债务融资（杰森，1993）。

外部控制是由公司控制权市场(Grossman and Hart,1980)、劳动力管理市场（Fama,1980）和产品市场（哈特,1983）施加的控制。

各种各样的金融丑闻，动摇了世界各地的投资者，公司治理最佳实践方式特别强调了内部控制系统在公司治理中起到的重要作用。

内部控制有助于通过提供保证可靠性的财务报告，和临时议会对可能会损害公司经营目标的事项进行评估和风险管理来保护投资者的利益。

这些功能已被的广泛普及内部控制系统架构设计的广泛认可，并指出了内部控制是用以促进效率，减少资产损失风险，帮助保证财务报告的可靠性和对法律法规的遵从（COSO,1992）。

尽管有其相关性，但投资者不能直接观察，因此也无法得到内部控制系统设计和发挥功能的信息，因为它们都是组织内的内在机制、活动和过程（Deumes and Knechel,2008）。

由于投资者考虑到成本维持监控管理其声称的（Jensen and Meckling，1976）,内部控制系统在管理激励信息沟通上的特性，以告知投资者内部控制系统的有效性,是当其他监控机制（该公司的股权结构和董事会）比较薄弱，从而为其提供便捷的监控（Leftwich et等, 1981）。

内部控制系统披露—一种可替代的管理机制塞尔吉奥-贝里塔会计部门博科尼大学根据代理理论，各种治理机制减少了投资者和管理者之间的代理问题（Jensen and Meckling，1976； Gillan，2006）。

传统上，治理机制已经被认定为内部或外部的。

内部机制包括董事会及其作用、结构和组成（Fama，1980；Fama and Jensen，1983），管理股权(Jensen and Meckling，1976)和激励措施，起监督作用的大股东(Demsetz and Lehn，1985)，内部控制系统(Bushman and Smith，2001)，规章制度和章程条款(反收购措施)和使用的债务融资（杰森，1993）。

外部控制是由公司控制权市场(Grossman and Hart,1980)、劳动力管理市场（Fama,1980）和产品市场（哈特,1983）施加的控制。

各种各样的金融丑闻，动摇了世界各地的投资者，公司治理最佳实践方式特别强调了内部控制系统在公司治理中起到的重要作用。

内部控制有助于通过提供保证可靠性的财务报告，和临时议会对可能会损害公司经营目标的事项进行评估和风险管理来保护投资者的利益。

这些功能已被的广泛普及内部控制系统架构设计的广泛认可，并指出了内部控制是用以促进效率，减少资产损失风险，帮助保证财务报告的可靠性和对法律法规的遵从（COSO,1992）。

尽管有其相关性，但投资者不能直接观察，因此也无法得到内部控制系统设计和发挥功能的信息，因为它们都是组织内的内在机制、活动和过程（Deumes and Knechel,2008）。

由于投资者考虑到成本维持监控管理其声称的（Jensen and Meckling，1976）,内部控制系统在管理激励信息沟通上的特性，以告知投资者内部控制系统的有效性,是当其他监控机制（该公司的股权结构和董事会）比较薄弱，从而为其提供便捷的监控（Leftwich et等, 1981）。

Managing Risk:An Enterprise-wide ApproachBarton·ThomasL1、Shenkir·WilliamG2、Walker·PaulL3Twenty-first century businesses worldwide operate in an environment where f orces such as globalization,technology,the internet,deregulation,restructurings and changing consummer expectations——are creating much uncertainty and prodigious risks. Consider, for example, that no force is having as great an impact on business today as the Internet. And as the internet evolves, companies in all industries are rethinking the basics: business models, core strategies and target customer bases.These new developments create new issues related to risk and risk management. Managing risk on an integrated and enterprise-wide basis is a vital issue confronting executives, with the CFO a key decisionmaker in crafting the company strategy, "I think the point to risk management is not to try and operate your business in a risk-free environment, it's to tip the scale to your advantage. So it becomes strategic rather than just defensive," observed Peter Cox, chief financial officer of United Grain Growers Ltd. (of Canada). To some extent, no matter what its products or services, every organization is in the business of risk management.Most executives would likely agree that risk management is part of their job, and there is probably agreement that risks are increasing rather than decreasing. But ask executives to elaborate on risk management and you'll no doubt get a variety of answers: "It's about preventing disasters," or, "It's something the insurance or finance people handle."Is it just business management?What does "risk management" mean to management in today's companies? Financial Executives Research Foundation recently published a book summarizing research on the subject gleaned from five companies in diverse industries. The book Making Enterprise Risk ManagementPay Off, reports on how the five are implementing enterprise-wide risk management. The companies studied were: Chase Manhattan Corp (now j . P. Morgan Chase & Co.), E.Ldu Pont de Nemours and Co.Microsoft Corp., United Grain Growers, Ltd. and Unocal Corp.One key finding is that risk management is not just about finance insurance or disasters. It's about running the business effectively and understanding, at the core, the fun damental risks facing the business .Tim Ling, president and chief operating officerof Unocal (and the company's former CFO), emphasized, "think you will see almost all companies over the next few years moving in the same direction [as we are],really trying to integrate the notion of risk management with the notion of just business management. To me,running a business is all about managing risk."Successful companies, almost by definition, have managed risks well,but practicing ―risk management‖ has typic ally been informal and implicit. Some companies may have survived without ever knowing their real portfolios of risks. Taking an implicit approach to risk management can be risky itself, as it's caused some major surprises to companies unaware of the explicit risks.Examples include major debacles such as product recalls or fraudulent securities trading, major shifts in markets that management missed or saw too late, and increasingly complex environmental or business changes not recognized by management. Successful risk management today is not just alxsut debacles and the downside –it’s as much about opportunities and the upside. As UGG's Peter Cox .said, it's a "strategic" initiative, not a "defensive" one.A paradigm shiftBy way of definition, enterprisewide risk management, or integrated risk management, is a paradigm shift for many companies. Its goal is to create, protect and enhance shareholder value by managing the uncertainties that could either negatively or positively influence achievementof the organization's objectives. Historically, managing risk was done in 'silos' rather than enter-prise-wide, That is, companies knew how to manage certain obvious risks individually but never thought about examining every risk and involving management in managing all of those risks. Typically, companies would have people who managed process risk, safety risk, insurance, financial and assorted other risks. A result of this fragmented approach was that companies would often take huge risks in some areas of the business while over-managing substantially smaller risks in other areas.Enterprise-wide risk management is a coordinated and focused approach for managing all risks together.What's driving companies to adopt enterprise-wide approaches to risk management? The study found three major reasons. For starters, risk management has gained recognition as companies have seen major debacles occur internally or at other companies. The size of these disasters can be devastating, and executives frequently lose their jobs as a result.Simply stated, one of the main reasons risk management hasbecome necessary is to manage strategically and avoid catastrophes.Secondly, many executives believe risks are greater than ever before. In fact, even being a chief executive is risky. The Economist(Nov. 11, 2000) reported that this past October alone, 129 chief executives left their companies and that the Business Council no longer puts an incoming executive on its member list immediately, but instead waits to see if the newcomer will last. Executives know the risks are there, but they are not sure what to do to manage them. Indeed, many executives would welcome a risk management plan and related risk ini'rastructure.The third reason concerns shareholder value. Companies have learned (as Unocal's Tim Lingexpressed) that managing risk is really about managing the business and therefore managing risk can create shareholder value if done correctly. Susan Stalnecker. DuPont strea.surer. comments on the old view of risk management versus the new,more integrated approach; "What we have is a control process now. We don't have a value creation process.That s what we re trying to do."The risk management processStudy results from ihe five companies clearly indicate there is no "cookie-cutter" or one-size-fits-all approach to risk management. Each company developed different yet overlapping approaches. Yet, in spite of the differences, each company’s management believed that their approach was adding value to their organization. The discussion that follows highlights some of the lessons learned about adding value through enterprise-wide risk management.1. Identify risks. Effective risk management initially means knowing your risks. Each of the case study companies had, in one way or another, made a concerted effort to identify its risks. Risks were identified in a variety of ways: using scenario analysis, brainstorming, performing risk self-assessments and generally by looking across the organization (or enterprise-wide) to make sure they had covered the major business risks. Karl Primm,Unocal’s general auditor, said of the new approach. ―Risk management is not new; managers have been doing this since the beginning of time. An integrated approach, however, does shed new light and benefits on the process." Risk identification is not static. As the business, economy and industry change, so do the risks and so,too. must the risk identification process.2. Rank risks. Once risks are identified, management can determine what to do withthem, depending on the effect of the risk on the business.A good first step in assessing the effect is to rank risks by some scale of impact and likelihood. DuPont implicitly lanks risks, while Microsoftuses risk rankings to generate "risk maps." (Risk maps are a graphical approach for viewing and plotting both likelihood and impact of risks.)Either way,can you imagine trying to run a business without knowing the real risks and without knowing the possible importance of each risk? It's a recipe for poor performance or even disaster. The goal is to make conscious decisions about risk,including all risks facing the business.3. Try to measure risks. As previously noted, some companies implicitly or explicitly rank risks; others decide to validate the risk's perceived importance. These companies want to have more evidence on importance before they make decisions about how to manage the risk.Gathering this additional evidence helps management allocate capital efficiently and avoid over-managingthose risks that are not as important while under-managing those that are important.Risk Measurement ApproachesBut some risks seem to defy reliable measurement. "The approach we have taken in financial risk and business risk is to try to quantify what we can and not necessarily worry that we are unable to capture everything in our measurement," said George Zinn. director of corporate finance for Microsoft, describing how his company views the problem. Still, companies should attempt serious risk measurement because it offers hard data to back up the perceived impact of risks.The most sophisticated measurement of risk occurs in the area of financial risk. Companies are using value at risk or V AR (effect of unlikely events in normal markets), and stress testing (effect of plausible events in abnormal markets)methodologies to measure the potential impact of the financial risks they face. To Microsoft. V AR provides a way to respond to the question. "How much risk is Microsoft taking?" Microsoft's treasurer, Brent Callinicos, said that before the company used V AR. it would have to ask "what they really meant." The risk management group, according to Callinicos, decided it "would tell anyone who asks what we mean when we say we have risk."The measurement of risk has been evolving from financial risk to now include non-financial risk which is more problematic. However, the companies studied havedeveloped eclectic approaches to measuring these various risks. For example:UGG took risk measurement to a new level by developing, among other measures, gain/loss curves for risks. Such curves reveal the dollar effect and likelihood of a risk affecting earnings. In addition, UGG found that a certain subset of its risks contributed to as much as 50 percent of the variance in revenues.Knowing what affects revenue (and earnings) variance is extremely valuable to any organization, and UGG was even able to negotiate insurance coverage incorporating its most significant risk, grain volume, at no incremental cost because the risks were integrated in the insurance package. Also, UGG's risk measurement included more than traditional financial risks.DuPont advanced financial risk measurement even further by developing earnings at risk (EAR) measurement tools. To DuPont,V AR was not as helpful because it's a concept that's haid for some managers to understand and manage. With EAR,DuPont measures the effect of risk on reported earnings. It can then manage risk to a specified earnings level based on the company's risk appetite. With this integrated view, it can even now begin to see how risks affect the likelihood of achieving certain earnings targets. At DuPont. this new approach is dramatically altering the way it manages risk.Chase Manhattan developed its own measurement system - share-holder value added (SV A), because management was concerned that decision-makers were not explicitly considering the cost of risk. ―We're in the business of taking risk, but we’re in the business of getting paid for the risks that we take," said vice chairman Marc Shapiro. Asset growth under SV A has slowed from 15 percent to two percent in only three years, while cash income is at a healthy 17 percent growth rate.Microsoft adds an advanced but different version of scenario analysis to assist with non-financial risk identification and measurement.The company's risk management group has utilized .several scenarios to identify key business risks. As Callinicos emphasized, "The scenarios are really what we're trying to protect against." Two scenarios are he possibility of an earthquake in lie Seattle region and a major downurn in the stock market.In some cases, after a risk was measured, management learned that the real effect of the risk was significantly lower or higher than they had previously believed. This further reflects the value of having good risk measurement. Bottom line:when management knows the real level of the risks they face, they can then manage thoserisks more effectively and successfully.Author affiliation：1Kathryn and Richard Kip Professor of Accounting, and KPMG Research Fellow of Accounting, University of North Florida2William Stamps Farish Professor of Free Enterprise, McIntire School of Commerce, University of Virginia3Associate professor of accounting, McIntire School of Commerce, University of Virginia危机管理:一个企业全面管理的方法托马斯.巴顿1、威廉2、保罗.沃克 3在21世纪全球商业运作的环境中,如全球化、技术力量、互联网、重组和改变消费者的期望等力量正在引起大量不确定性和巨大的风险。

附录A附录B如何监测内部控制内部控制是任何组织有效运行的关键,董事会、执行长和内部审计人员都为实现这个企业的目标而工作;该内部控制系统是使这些团体确保那些目标的达成的一种手段。

控制帮助一个企业有效率地运转。

此外,运用一种有效的风险系统,风险可被降低到最小。

同时,控制促进经营和与经营有关的信息的可靠性。

全美反舞弊性财务报告委员会发起组织(COSO；1992) 在它发布的具有开创性的文件《内部控制整合框架》中,将内部控制定义为：企业风险管理是一个过程，受企业董事会、管理层和其他员工的影响，包括内部控制及其在战略和整个公司的应用，旨在为实现经营的效率和效果、财务报告的可靠性以及法规的遵循提供合理保证。

该委员会还指出,一个的内部控制的系统包括五个要素。

它们是：控制环境、风险评估、信息和沟通、控制活动、监控。

COSO的定义及五个要素已被证明确实对不同的团体,如董事会和首席执行官起到作用。

这些群体对内部控制系统的监管以及系统设计与运行有责任。

而且,内部审计人员已经发现COSO的指导是有用的。

这群人员可能会被董事会或管理层要求去测试控制。

COSO最近发布的一份讨论文件，指出五个要素监控,其中的五个要素的确定在1992 frame work COSO原本。

中国发展简报的题为《内部控制-整合框架：内部控制体系监督指南》(COSO，2007)。

在文件中,COSO 强调监控的重要性，以及这些信息常常被没有充分利用。

因为董事会、执行长,和内部审计人员都在一个公司的内部控制中扮演着重要角色，内部控制的各要素,包括监测,都对所有的团体有着非常重要的意义。

同时,外审计人员对监测有兴趣。

《萨班斯-奥克斯利法案》（2002）为外部审计师创建了一个新的监督体制。

所有的五个要素,包括监测,必须加以考虑。

另外,内部控制审计必须结合对财务报告的检查。

在一体化审计之前，在首席执行官的领导下，也许也在内部审计活动的支持下的管理，评估了内控制体系的有效性。

Managing Risk:An Enterprise-wide ApproachBarton·ThomasL1、Shenkir·WilliamG2、Walker·PaulL3Twenty-first century businesses worldwide operate in an environment where f orces such as globalization,technology,the internet,deregulation,restructurings and changing consummer expectations——are creating much uncertainty and prodigious risks. Consider, for example, that no force is having as great an impact on business today as the Internet. And as the internet evolves, companies in all industries are rethinking the basics: business models, core strategies and target customer bases.These new developments create new issues related to risk and risk management. Managing risk on an integrated and enterprise-wide basis is a vital issue confronting executives, with the CFO a key decisionmaker in crafting the company strategy, "I think the point to risk management is not to try and operate your business in a risk-free environment, it's to tip the scale to your advantage. So it becomes strategic rather than just defensive," observed Peter Cox, chief financial officer of United Grain Growers Ltd. (of Canada). To some extent, no matter what its products or services, every organization is in the business of risk management.Most executives would likely agree that risk management is part of their job, and there is probably agreement that risks are increasing rather than decreasing. But ask executives to elaborate on risk management and you'll no doubt get a variety of answers: "It's about preventing disasters," or, "It's something the insurance or finance people handle."Is it just business management?What does "risk management" mean to management in today's companies? Financial Executives Research Foundation recently published a book summarizing research on the subject gleaned from five companies in diverse industries. The book Making Enterprise Risk ManagementPay Off, reports on how the five are implementing enterprise-wide risk management. The companies studied were: Chase Manhattan Corp (now j . P. Morgan Chase & Co.), E.Ldu Pont de Nemours and Co.Microsoft Corp., United Grain Growers, Ltd. and Unocal Corp.One key finding is that risk management is not just about finance insurance or disasters. It's about running the business effectively and understanding, at the core, the fun damental risks facing the business .Tim Ling, president and chief operating officerof Unocal (and the company's former CFO), emphasized, "think you will see almost all companies over the next few years moving in the same direction [as we are],really trying to integrate the notion of risk management with the notion of just business management. To me,running a business is all about managing risk."Successful companies, almost by definition, have managed risks well,but practicing ―risk management‖ has typic ally been informal and implicit. Some companies may have survived without ever knowing their real portfolios of risks. Taking an implicit approach to risk management can be risky itself, as it's caused some major surprises to companies unaware of the explicit risks.Examples include major debacles such as product recalls or fraudulent securities trading, major shifts in markets that management missed or saw too late, and increasingly complex environmental or business changes not recognized by management. Successful risk management today is not just alxsut debacles and the downside –it’s as much about opportunities and the upside. As UGG's Peter Cox .said, it's a "strategic" initiative, not a "defensive" one.A paradigm shiftBy way of definition, enterprisewide risk management, or integrated risk management, is a paradigm shift for many companies. Its goal is to create, protect and enhance shareholder value by managing the uncertainties that could either negatively or positively influence achievementof the organization's objectives. Historically, managing risk was done in 'silos' rather than enter-prise-wide, That is, companies knew how to manage certain obvious risks individually but never thought about examining every risk and involving management in managing all of those risks. Typically, companies would have people who managed process risk, safety risk, insurance, financial and assorted other risks. A result of this fragmented approach was that companies would often take huge risks in some areas of the business while over-managing substantially smaller risks in other areas.Enterprise-wide risk management is a coordinated and focused approach for managing all risks together.What's driving companies to adopt enterprise-wide approaches to risk management? The study found three major reasons. For starters, risk management has gained recognition as companies have seen major debacles occur internally or at other companies. The size of these disasters can be devastating, and executives frequently lose their jobs as a result.Simply stated, one of the main reasons risk management hasbecome necessary is to manage strategically and avoid catastrophes.Secondly, many executives believe risks are greater than ever before. In fact, even being a chief executive is risky. The Economist(Nov. 11, 2000) reported that this past October alone, 129 chief executives left their companies and that the Business Council no longer puts an incoming executive on its member list immediately, but instead waits to see if the newcomer will last. Executives know the risks are there, but they are not sure what to do to manage them. Indeed, many executives would welcome a risk management plan and related risk ini'rastructure.The third reason concerns shareholder value. Companies have learned (as Unocal's Tim Lingexpressed) that managing risk is really about managing the business and therefore managing risk can create shareholder value if done correctly. Susan Stalnecker. DuPont strea.surer. comments on the old view of risk management versus the new,more integrated approach; "What we have is a control process now. We don't have a value creation process.That s what we re trying to do."The risk management processStudy results from ihe five companies clearly indicate there is no "cookie-cutter" or one-size-fits-all approach to risk management. Each company developed different yet overlapping approaches. Yet, in spite of the differences, each company’s management believed that their approach was adding value to their organization. The discussion that follows highlights some of the lessons learned about adding value through enterprise-wide risk management.1. Identify risks. Effective risk management initially means knowing your risks. Each of the case study companies had, in one way or another, made a concerted effort to identify its risks. Risks were identified in a variety of ways: using scenario analysis, brainstorming, performing risk self-assessments and generally by looking across the organization (or enterprise-wide) to make sure they had covered the major business risks. Karl Primm,Unocal’s general auditor, said of the new approach. ―Risk management is not new; managers have been doing this since the beginning of time. An integrated approach, however, does shed new light and benefits on the process." Risk identification is not static. As the business, economy and industry change, so do the risks and so,too. must the risk identification process.2. Rank risks. Once risks are identified, management can determine what to do withthem, depending on the effect of the risk on the business.A good first step in assessing the effect is to rank risks by some scale of impact and likelihood. DuPont implicitly lanks risks, while Microsoftuses risk rankings to generate "risk maps." (Risk maps are a graphical approach for viewing and plotting both likelihood and impact of risks.)Either way,can you imagine trying to run a business without knowing the real risks and without knowing the possible importance of each risk? It's a recipe for poor performance or even disaster. The goal is to make conscious decisions about risk,including all risks facing the business.3. Try to measure risks. As previously noted, some companies implicitly or explicitly rank risks; others decide to validate the risk's perceived importance. These companies want to have more evidence on importance before they make decisions about how to manage the risk.Gathering this additional evidence helps management allocate capital efficiently and avoid over-managingthose risks that are not as important while under-managing those that are important.Risk Measurement ApproachesBut some risks seem to defy reliable measurement. "The approach we have taken in financial risk and business risk is to try to quantify what we can and not necessarily worry that we are unable to capture everything in our measurement," said George Zinn. director of corporate finance for Microsoft, describing how his company views the problem. Still, companies should attempt serious risk measurement because it offers hard data to back up the perceived impact of risks.The most sophisticated measurement of risk occurs in the area of financial risk. Companies are using value at risk or V AR (effect of unlikely events in normal markets), and stress testing (effect of plausible events in abnormal markets)methodologies to measure the potential impact of the financial risks they face. To Microsoft. V AR provides a way to respond to the question. "How much risk is Microsoft taking?" Microsoft's treasurer, Brent Callinicos, said that before the company used V AR. it would have to ask "what they really meant." The risk management group, according to Callinicos, decided it "would tell anyone who asks what we mean when we say we have risk."The measurement of risk has been evolving from financial risk to now include non-financial risk which is more problematic. However, the companies studied havedeveloped eclectic approaches to measuring these various risks. For example:UGG took risk measurement to a new level by developing, among other measures, gain/loss curves for risks. Such curves reveal the dollar effect and likelihood of a risk affecting earnings. In addition, UGG found that a certain subset of its risks contributed to as much as 50 percent of the variance in revenues.Knowing what affects revenue (and earnings) variance is extremely valuable to any organization, and UGG was even able to negotiate insurance coverage incorporating its most significant risk, grain volume, at no incremental cost because the risks were integrated in the insurance package. Also, UGG's risk measurement included more than traditional financial risks.DuPont advanced financial risk measurement even further by developing earnings at risk (EAR) measurement tools. To DuPont,V AR was not as helpful because it's a concept that's haid for some managers to understand and manage. With EAR,DuPont measures the effect of risk on reported earnings. It can then manage risk to a specified earnings level based on the company's risk appetite. With this integrated view, it can even now begin to see how risks affect the likelihood of achieving certain earnings targets. At DuPont. this new approach is dramatically altering the way it manages risk.Chase Manhattan developed its own measurement system - share-holder value added (SV A), because management was concerned that decision-makers were not explicitly considering the cost of risk. ―We're in the business of taking risk, but we’re in the business of getting paid for the risks that we take," said vice chairman Marc Shapiro. Asset growth under SV A has slowed from 15 percent to two percent in only three years, while cash income is at a healthy 17 percent growth rate.Microsoft adds an advanced but different version of scenario analysis to assist with non-financial risk identification and measurement.The company's risk management group has utilized .several scenarios to identify key business risks. As Callinicos emphasized, "The scenarios are really what we're trying to protect against." Two scenarios are he possibility of an earthquake in lie Seattle region and a major downurn in the stock market.In some cases, after a risk was measured, management learned that the real effect of the risk was significantly lower or higher than they had previously believed. This further reflects the value of having good risk measurement. Bottom line:when management knows the real level of the risks they face, they can then manage thoserisks more effectively and successfully.Author affiliation：1Kathryn and Richard Kip Professor of Accounting, and KPMG Research Fellow of Accounting, University of North Florida2William Stamps Farish Professor of Free Enterprise, McIntire School of Commerce, University of Virginia3Associate professor of accounting, McIntire School of Commerce, University of Virginia危机管理:一个企业全面管理的方法托马斯.巴顿1、威廉2、保罗.沃克 3在21世纪全球商业运作的环境中,如全球化、技术力量、互联网、重组和改变消费者的期望等力量正在引起大量不确定性和巨大的风险。

Project Budget Monitor and ControlAuthor：Yin Guo-liNationality：AmericanDerivation： Management Science and Engineering. Montreal: Mar 20, 2020.With the marketing competitiveness growing, it is more and more critical in budget control of each project. This paper discusses that in the construction phase, how can a project manager be successful in budget control. There are many methods discussed in this paper, it reveals that to be successful, the project manager must concern all this methods.1. INTRODUCTIONThe survey shows that most projects encounter cost over-runs (Williams Ackermann, Eden, 2002,pl92). According to Wright (1997)'s research, a good rule of thumb is to add a minimum of 50% to the first estimate of the budget (Gardiner and Stewart, 1998, p251). It indicates that project is very complex and full of challenge. Many unexpected issues will lead the project cost over-runs. Therefore, many technologies and methods are developed for successful monitoring and control to lead the project to success. In this article, we will discuss in the construction phase, how can a project manager to be successful budget control.2. THE CONCEPT AND THE PURPOSE OF PROJECT CONTROL AND MONITORErel and Raz (2000) state that the project control cycle consists of measuring the status of the project, comparing to the plan, analysis of the deviations, and implementing any appropriate corrective actions. When a project reach the construction phase, monitor and control is critical to deliver the project success. Project monitoring exists to establish the need to take corrective action, whilst there is still time to take action. Through monitoring the activities, the project team can analyze the deviations and decide what to do and actually do it. The purpose of monitor and control is to support the implementation of corrective actions, ensure projects stay on target or get project back on target once it has gone off target。

外文文献及翻译THE CONCEPT OF INTERNALCONTROLSYSTEM: THEORETICALASPECTVaclovas Lakis, Lukas Giriūnas*Vilnius University, LithuaniaIntroductionOne of the basic instruments of enterprise control, whose implementation in modern economic conditions provide conditions for achieving a competitive advantage over other enterprises is the creation of an effective internal control system. In the industry sector, the market is constantly changing, and this requires changing the attitude to internal control from treating it only in the financial aspect to the management of the control process. Internal control as such becomes an instrument and means of risk control, which helps the enterprise to achieve its goals and to perform its tasks. Only an effective internal control in the enterprise is able to help objectively assessing the potential development and tendencies of enterprise performance and thus to detect and eliminate the threats and risks in due time as well as to maintain a particular fixed level of risk and to provide for its reasonablesecurity .The increasing variety of concepts of internal control systems requires their detailed analysis. A detailed analysis of the conceptions might help find the main reasons for their increasing number. It may also help to elaborate a structural scheme of the generalized concept of internal control. Consequently, it may help decrease the number of mistakes and frauds in enterprises and to offer the precautionary means that might help to avoid mistakes and build an effective internal control system.The purpose of the study: to compile the definition of the concept of internal control system and to elaborate the structural scheme of the generalized conception for Lithuanian industrial enterprises.The object of the research: internal control.To achieve the aim, the following tasks were carried out:to examine the definitions of internal control;to design a flowchart for the existing definitions of internal control;to formulate a new internal control system definition;? to identify the place of the internal control system in a company’s objectives and ? its management activities.Study methods: for the analysis of the conceptions of control, internal control, theconcept of internal control system, systematic and comparative means of scietific methods of analysis were used.1. Research of control conceptionAccording to J. Walsh, J. Seward (1990), H. K. Chung, H. Lee Chong, H. K.Jung (1997), control may be divided into two types – internal and external controls those might help to equalize authority or concerned party‘s attitudes to some certain organization control. Internal control involves the supreme enterprise control apparatus and enterprise shareholders, whereas external control might be defined as the power in the market or branch, competitive environment or state business regulation. Such analytical division is essential when analysing industrial or other enterprises, because this attitude to control makes it more specific and properly defined.The identification of an appropriate primary theoretical base is an important task in forming the structure of knowledge about the study subject. Appropriately selected conceptions enable to elucidate the essence of the processes, to characterize them and to realize their interplays and interaction principles. Conceptions may be defined as a summation of empirical cognition which transforms practically achieved results into conceptions. The above ideas might be taken as abstractions and lead to an ungrounded conclusion, and through conceptions the reality might be lost. Operating with more than one conceptions allows to form a universal opinion about the reality. Noteworthy, when operating with conceptions an optimal agreement might be found between theory and practice: using the common point of contact –conceptions –a theorist and a practician will always find the way and understand one another.The main problem of internal control is related to the definition of control conception and the identification of the place of internal control in an organization. Constant changes of the extent, functions and roles of internal control enable to form acommon definition of internal control and to identify its place in an organization.Analysis of the concept of internal control and its interpretation are essential for assessing the internal control system, because the conception of control is widely used not only in scientific research, but also in the daily activities of an enterprise; therefore the same conception might have a lot of various meanings and interpretations. Analysis of the concept provides conditions for the further research, because it is impossible to form a model of internal control assessment if the research object is unknown. A lot of definitions and variations of control can be found in thepublications by Lithuanian and foreign scientists and in public information sources. For example, in the Dictionary of International Words (2002), control is defined as: supervision, inspection of something; comparison of actual and required ? conditions; an enterprise or a group of people that control the work and responsibility of other ? enterprises or groups of people;maintenance of something.?In addition to the above seven internal control, and documentation control. Performance control and worker quality control, etc. The new system of accounting supervision system on the unit interior, the main contents of the internal control system.On the other hand, in the specialized Dictionary of Economic Terms (2005), control is defined as a performance with a definite influence on the management of an enterprise, as rights based on laws and contracts that involve proprietary rights to the whole property or its part, or any other rights that enable to exert a significant influence on the management and performance of an enterprise, or state supervision. Even in common information sources the definitions of control are formulated differently, although the common meaning is quite similar. Analysis and practical studies of Lithuanian scientists’ works enable to state that there is no one solid concept, definition or description of control. For example, E. Bu?kevi?iūt? (2008) says that when control is more particularly defined, its rules and requirements are described in more detail, it becomes more effective, more specific, more psychologically suggestive, it gives more freedom limits of choice for supervisors and less possibilities of lawlessness for people under control when. Identifying the object of the research, it should be noted that different definitions of control are given in scientific studies by Sakalas, 2000; Navickas, 2011; Katkus, 1997; Bu?kevi?iūt?, 2008; Drury, 2012; Bi?iulaitis, 2001; Lee Summers, 1991; Patrick, Fardo, 2009; Spencer, Pickett, 2010; Gupta, 2010 and other Lithuanian and foreign scientists (see Fig. 1).The different conceptions and their interpretations indicate that there is no solid opinion about how to define control, and even scientists and practicians themselves do not agree upon a unified definition or description of control or the conception of internal control and its interpretations. In scientific literature, different interpretations of control conceptions are usually related to different aspects of this conception, and their meaning in different situations may be defined in different ways depending on the situation and other external factors. According to A. Katkus (1997), C. Drury (2009), R. Bi?iulaitis (2001), D. R. Patrick, S. W. Fardo (2009), K. H. S. Pickett (2010), during a long-term period control is usually related to achieving the alreadysettled goals, their improvement and insurance. In other information sources (Dictionary of International Words, 2002; Sakalas, 2000; Bukeviiūt, 2008; Lee Summers, 1991) control is emphasized as a certain means of inspection which provides a possibility to regulate the planned and actual states and their performance. Despite these different opinions, control might be reasoned and revealed as a traditional function of any object of control, emphasized as one of the main self-defence means from the possible threats in the daily performance of an organization. There is also a more modern approach. For example, V. Navickas (2011) and P. Gupta (2010), presenting the concept of control, name it not only as one of the main factors that influence the organization’s performance and influences its management, but also as one of the assessment means of the taken decisions and achieved values. Such interpretation of the conception of control shows the main role of control. For example, R. Kanapickien? (2008) has analysed a big number of control definitions and says that only an effective and useful control should exist in an enterprise because each enterprise tries to implement its purposes and avoid the possible losses, i.e. mistakes and frauds. According to J.A. Pfister (2009), there are several types of control, and they can be grouped into strategic, management, and internal control. Thus, different researchers give different definitions of control, their descriptions have different goals, but different control definitions lead to numerous variations in the analysis of the conception of control. Thus, to create an effective control, the presence of its unified concept becomes a necessity and the basis for ensuring an effective control of the organization’s performance. The existence of different conceptions of control also indicates that there might be different types or kinds of control.2. The conception of internal controlHistorical development of internal control as individual enterprise system is not as broad as other management spheres in science directions. The definition of internal control was presented for the first time in 1949 by the American Institute of Certificated Accountants (AICPA). It defined internal control as a plan and other coordinated means and ways by the enterprise to keep safe its assets, check the covertness and reliability of data, to increase its effectiveness and to ensure the settled management politics. However, the presented definition of control concept has been constantly improved, and nowadays there is quite an extensive set of conceptions that indicates the system of internal control as one of the means of leadership to ensure safety of enterprise assets and its regular development. In 1992, the COSOmodelappeared; its analysis distinguished the concepts of risk and internal control. Nnow, the concept of internal control involved not only accounting mistakes and implementing means of their prevention, but also a modern attitude that might identify the spheres of control management and processes, and also a motivated development of their detailed analysis. The Worldwide known collapses of such companies as Enron, Worldcom, Ahold, Parmalat and others determined to issue in 2002 the Law of Sarbanes–Oxley in the USA, in which attention is focused on the effectiveness of the enterprise internal control system and its assessment. Such a significant law as that of Sarbanes–Oxley has dearly show that not only the internal control system must be concretized and clearly defined, but also the means of implementing the internal control system and assessing their effectiveness must be covered. The concept of internal control was further improved by such Lithuanian and foreign scientists as A.Сонин(2000), D. Robertson (1993), M.R. Simmons (1995), I. Toliatien? (2002), V. Lakis (2007), R. Biiulaitis (2001), J. Mackeviius (2001) and the international scientific organizations COSO, INTOSAI, CICA, IT Governance Institute.A comparative analysis of the introduced concepts of internal control shows that the usage of the concept of internal control is quite broad as it is supposed to involve the performance not only of the state, but also of the private sector. Although the conception of internal control is defined in different ways emphasizing its different aspects, the essential term still remains the same in all authors’ definitions: internal control is the inspection, observation, maintenance and regulation of the enterprise’s work (see Fig. 3.).It should be also be mentioned that the system of internal control may be defined in different ways every time. For example, R. T. Yeh and S. H. Yeh (2007) pay attention to the fact that usually such values as honesty, trust, respect, openness, skills, courage, economy, initiative, etc. are not pointed out, although they definitely can influence not only the understanding of the concept of internal control, but also its definition, because in different periods of time and in different situations it can obtain slightly different shades of meaning. Control and people, and values produced by people or their performance are tightly connected; consequently, internal control must be also oriented to the enterprise’s values, mission and vision; it does not matter how differently authors define the conception assessment limits: significant attention must be paid not to internal control itself, but to the identification of its functions andevaluation. Mostly internal control is concerned with authority management tools that help to control processes and achieve enterprise goals (COSO, 1992; Сонин, 2000; INTOSAI, 2004; CobiT, 2007; Toliatien?, 2002; Coco, 1995).C.J. Buck, J.B. Breuker (2008) declare internal control as a mistake detecting and correctingsystem; although J. Mackevi?ius (2001) and R. Bi?iulaitis (2001a) state that internal control is defined as a summation of certain rules, norms and means, actually such definitions are identical, but internal control must be related to safety, the rational use of property and the reliability of financial accounting.Results of a comprehensive analysis of internal control enable to state that, although different authors give different definitions of internal control, there are still some general purposes of the system of internal control, aimed, to ensure reliable and comprehensive information, to protect the property and documents, to enssure an effective economic performance, observation of accounting principles and presentation of reliable financial records, obeying laws and executive acts, enterprise rules and the effective control of risk. Analysis of concept of internal control, presented in both foreign and Lithuanian literature enables to formulate its generalized definition: the system of internal control is part of enterprise management system, which ensures the implementation of its goals, effective economic and commercial performance, observance of accounting principles and an effective control of risks, which enables to minimize the number of intentional and unintentional mistakes and to avoid frauds in the process of enterprise performance, made by its authority or employees.The internal control is an important symbol of modern enterprise management, through the practice of the conclusion is: to control is strong, weak, without control is controlled, disorderly. The new regulations "accounting law 27 units shall establish and perfect the system of supervision unit interior accountant. Unit interior accountant controls on the execution, the internal control is.The internal control is the formation of a series of measures to control functions, procedures, methods, and standardized and systematized, make it become a rigorous, relatively complete system. According to the control of the internal control can be divided into different purpose accounting control and management control. Accounting control and protection of assets is safe, the accounting information authenticity and integrity and financial activities related to the legitimacy of control, Management control means to ensure operation policy decision, implementation ofbusiness activities and promote the efficiency and effectiveness, and the effect of the relevant management to achieve the goals of control. Accounting control and management control and not mutually exclusive, incompatible, some control measures can be used for accounting control, and can also be used to control.The goal is to ensure that the internal control unit operations efficiency and effect, safety, economic information of assets and financial reports of reliability. Its main functions: one is to achieve target management policy and management, Second is the assets of safety protection unit is complete, prevent loss of assets, Three is to guarantee the business and financial accounting information authenticity and integrity. In addition, the legitimacy of the financial activities within the unit is the internal control goals.Good, although the internal control to achieve these goals, but whether the internal control design and operation, it is not how to eliminate its inherent limitations. This limitation must also be clear and prevention. Main show is: (1) the limited by cost benefit principle, (2) if the employee has different responsibility ignore control program, misjudgment, even the collusion, inside and outside, often cause in fraud internal control malfunction, (3) management personnel abuse, and to set up or Passover control of internal control ignored, also can make the establishment of internal control non-existing.The internal control system in a company must cover and help to properly organize and control the entire activity of the company; thus, according to majority of authors, internal control is all-inclusive activity in financial and management accounting, as well as in the strategic management of projects, operations, personneland the total quality management. However, the most important thing is that internal control should not only cover the entire activity of the company, but also take into account its objectives, goals and tasks in order to make its economic-commercial activity as effective as possible. Analysis of scientific literature in the field shows that it is important not only to predict the particular areas of internal control and interrelate them, but also to stress that the most important objective of internal control is the effective management of risk by identifying and eliminating errors and frauds inside the company. Therefore, the concept of internal control offered by the authors covers a company’s areas of activities, its tasks and objectives; also, it provides for the main goal – an effective risk management.Despite the quantitative indicators used for goal assessment, each enterprise and especially extractive industry enterprises where attention should be focused onavoiding mistakes and fraud should elaborate and introduce a really effective and optimal system of internal control and accounting so as to strengthen its position in the market and optimize profitability.ConclusionsThe analysis of control definitions has shown that rather wide variations of definitions and their interpretations prove control to be a wide concept, mainly due to the fact that control has quite many different aspects and its meaning in different situations may be also defined differently.Nevertheless, there are still some general aspects of the system of internal control, which include ensuring reliable and comprehensive information, protecting the property and documents, to ensure an effective economic performance, keeping to the principles of accounting and presenting reliable financial records, obeying laws and executive acts, enterprise rules and ensuring an effective control of risk.As a result of the study, the authors present an inclusive and generalizing definition of internal control: the system of internal control is part of the enterprise management system that ensures the implementation of the enterprise’s goals, its effect ive economic-commercial performance, observance of accounting principles and an effective control of work risks, which enables to minimize the number of intentional and unintentional mistakes, and to avoid frauds in the process of enterprise performance, made by its authority or employees.中文翻译：内部控制制度：理论研究拉基斯，卢卡斯维尔纽斯大学，立陶宛引言企业控制的基本工具之一，建立一个有效的内部控制制度，为现代经济条件下企业获得竞争优势提供了条件。

LNTU---Acc附录A关于内部控制的意见 如果要证明功能扩展到包含内部控制的有效性，那么报告准则则必须制定，若干基本问题必须被解决。

随着日益频繁增长，审计员听取了他们应该发表的一个效力于客户的内部控制制度建议的意见。

这一证明功能扩展的主张者迅速指出，目前已经有了实例如独立审计师的报告公开他们的客户的内部控制制度和一些政府机构的成效，包括一些空置中的美国证券和交易委员会，都需要一个报告。

这些证实类型的反对者公布了任何关于内部控制的有效性，他们认为，目前有显着性差异监管机构的报告要求和提出意见的内部控制将会误导公众。

本文综述了目前报告的做法，考虑到理想状态相关的危害的特点，并最后提出了一些在任何给与最后判决之前必要的予以回答的问题。

现状报告 虽然审计员的报告中的一些情况提及了内部控制的性质，但作出的本质陈述还有很大不同的效应。

大型银行。

关于对内部控制的观点事实上出现在一些大型银行和看法发行的年度报告中。

有时这些意见是被董事会要求的。

例如，下面的主张出现在1969年年度报告的一个大型纽约银行中，作为第3款的独立会计师的标准短形式的报告： 我们的审核工作包括评价有效性，大块的内部会计控制，其中还包括内部审计。

我们认为，在于程序的影响下，再加上银行内部审计工作人员所进行的审核，这些构成一个有效的系统的内部会计控制。

意见被提供给几个其他银行，但它们基本上引用的意见是一样的。

美国证券交易委员会的规定。

美国证券交易委员会表格X-17A-5，要求独立审计师作出某些有关的内部控制陈述，并必须在每年的大多数成员国家与每一个证券经纪或注册的交易商根据1934年证券交易法第15条进行交流时。

此外，美国证券交易委员会的第17a-5(g)规定要求独立的核数师的报告要包含“一份如，是否会计师审查了程序，要安全措施保障客户的证券的声明中”此外，许多股票交易所要求该报告要表明审查已取得的“会计制度，内部会计控制和程序，是为维护证券，包括适当的测试它们对以后的期间，检验日期前”，很显然，美国证券交易委员会的工作人员更倾向于考虑，会计师包括了语言相似，所要求的所有报告的交流提交给证券交易委员会。

附录A公司治理与高管薪酬：一个应急框架总体概述通过整合组织和体制的理论，本文开发了一个高管薪酬的应急办法和它在不同的组织和体制环境下的影响。

高管薪酬的研究大都集中在委托代理框架上，并承担一种行政奖励和业绩成果之间的关系。

我们提出了一个框架，审查了其组织的背景和潜在的互补性方面的行政补偿和不同的公司治理在不同的企业和国家水平上体现的替代效应。

我们还讨论了执行不同补偿政策方法的影响，像“软法律”和“硬法律”。

在过去的20年里，世界上越来越多的公司从一个固定的薪酬结构转变为与业绩相联系的薪酬结构，包括很大一部分的股权激励。

因此，高管补偿的经济影响的研究已经成为公司治理内部激烈争论的一个话题。

正如Bruce，Buck，和Main指出，“近年来，关于高管报酬的文献的增长速度可以与高管报酬增长本身相匹敌。

”关于高管补偿的大多数实证文献主要集中在对美国和英国的公司部门，当分析高管薪酬的不同组成部分产生的组织结果的时候。

根据理论基础，早期的研究曾试图了解在代理理论方面的高管补偿和在不同形式的激励和公司业绩方面的探索链接。

这个文献假设，股东和经理人之间的委托代理关系被激发，公司将更有效率的运作，表现得更好。

公司治理的研究大多是基于通用模型——委托代理理论的概述，以及这一框架的核心前提是，股东和管理人员有不同的方法来了解公司的具体信息和广泛的利益分歧以及风险偏好。

因此，经理作为股东的代理人可以从事对自己有利的行为而损害股东财富的最大化。

大量的文献是基于这种直接的前提和建议来约束经理的机会主义行为，股东可以使用不同的公司治理机制，包括各种以股票为基础的奖励可以统一委托人和代理人的利益。

正如Jensen 和Murphy观察，“代理理论预测补偿政策将会以满足代理人的期望效用为主要目标。

股东的目标是使财富最大化；因此代理成本理论指出，总裁的薪酬政策将取决于股东财富的变化。

”影响积极组织结果的主要指标是付费业绩敏感性，但是这种“封闭系统”法主要是在英美的代理基础文献中找到，假定经理人激励与绩效之间存在普遍的联系，很少的关注在公司被嵌入的不同背景。

内部治理结构与盈余管理本文探讨了公司的内部治理结构对盈余管理的约束作用。

这是假设盈余管理系统地涉及到公司内部治理机制的各个方面的前提下进行的研究，研究包括董事会的力量，审计委员会，内部审计职能的变化与外部审计师的选择四个方面。

基于横截面模型以2000年末在澳大利亚上市的434家公司为样本，将可控性应计利润作为衡量盈余管理的水平，发现董事会及审计委员会的非执行董事的人数越多盈余管理的可能性越低。

内部审计职能和审计机构的选择与盈余管理没有显著的相关性。

我们进一步分析还发现，利用收入的增加作为盈余管理的替代变量时，盈余管理和审计委员会的存在具有负相关关系。

关键词：审计委员会；公司治理；盈余管理；内部审计职能1 前言最近在澳大利亚及海外的操纵会计行为的案件表明公司治理机制的重要性，强有力的公司治理涉及到与公司绩效水平监测的一个适当的平衡(Cadbury,1997)。

在本论文中，我们以澳大利亚的公司治理为例探索治理机制与盈余之间的关系，因此，我们的重点是治理的监督作用。

我们研究的是独立的董事局（ShleiferandVishny，1997），独立委员会主席，一个有效的审计委员会（MenonandWilliams，1994年），内部审计（Clikeman，2003年）和外部审计师的选择使用（贝克尔埃塔尔，1998；弗朗西斯埃塔尔，1999）对盈余管理产生的影响。

在此之前的研究已经调查了治理机制可以减少欺诈性财务报告的产生（比斯利，1996; Dechowetal，1996年）。

这些研究认为有效的治理机制和真实的财务报告与违反一般公认会计原则（GAAP）呈负相关关系。

不过，相对较新的研究领域是公司治理与盈余管理。

Peasnell等（2000）研究表明盈余管理与董事会的独立性是负相关的，而另一些研究发现审计委员会与盈余管理之间存在显着的关系（Chtourouetal.2001; Xieetal，2001）。

澳大利亚公司内部治理结构和盈利管理实践检验是具有前提条件的，而Peasnell使用的数据主要是研究美国的。

外文文献翻译译文一、外文原文原文：Corporate Governance Quality and Internal Control Reportingunder SOX Section 302In this study I examine the impact of corporate governance quality on firm reporting quality in the absence of an external audit. Specifically, I examine the corporate governance quality impact on firm reporting of internal control deficiencies (ICDs) prior to SOX-mandated audits. In doing so, I provide evidence on the current debate over whether smaller public companies should be exempted from the audit of internal controls as mandated by the Sarbanes- Oxley Act of 2002 (SOX) section 404.To test the link between corporate governance quality and company reporting, I use internal control reports issued by management under section 302 of SOX. This section requires that CEOs and CFOs certify in each quarterly and annual report that they have evaluated the company’s internal controls “a s of a date within 90 days prior to the report”and that they have presented their conclusions regarding the effectiveness of their controls in that quarterly or annual report. This requirement relates to all quarterly and annual filings after August 29, 2002.The requirements in SOX relating to internal control reporting provide an ideal setting to examine the impact of corporate governance on firm reporting in the absence of the audit. Under Section 302 management is required to perform control evaluations; however, the auditor is not required to evaluate management’s assessment of control quality or to perform their own control evaluation. Beginning with fiscal year ends after November 15, 2004, section 404 of SOX requires that the external financial statement auditor perform an audit of the firm’s internal controls over financial reporting and provide an opinion in the annual filing as to their effectiveness as well as an opinion regarding management’s assessment of internalcontrols.Therefore, from the period of August 29, 2002 until the firm s’ first fiscal year end on or after November 15, 2004, the reporting decisions of the firm regarding internal control quality were controlled by management and other corporate governance bodies. External auditors had no responsibility during this time period to perform the extent of control tests necessary to come to a conclusion regarding control effectiveness, nor did they have a responsibility to publicly report on internal control quality.I use this lag time between the implementation of section 302 and section 404 to examine the impact of corporate governance quality on disclosure quality in a setting where we know what “shoul d” h ave been disclosed (i.e. weaknesses identified in the audited internal control report).Using this setting, I examine two questions of interest: First, does corporate governance quality impact the likelihood of disclosure of ICDs prior to SOX-mandated audits? Second, holding constant the disclosure of ICDs under SOX 302, does corporate governance quality impact the likelihood of correct assessment of the level of seriousness of the ICD?Significant discussion has taken place regarding the costs and benefits of SOX section 404 which requires an audit of internal controls over financial reporting. The SEC continues to push back the compliance date for smaller companies, with the most recent proposal pushing compliance to fiscal years on or after December 15, 2009 for these smaller companies (SEC 2008).Some have argued that attempting to improve financial reporting quality by improving corporate governance quality might be a less costly alternative to the audit of internal controls (SEC 2005).I provide evidence on this assertion by examining the role of corporate governance in the disclosure of ICDs prior to SOX-mandated audits.I hold constant the existence of control problems by examining only those companies that disclosed material weaknesses in internal controls in their first audited internal control report. From this sample of companies with material weaknesses, I look back in time to compare companies that disclose those ICDs under the section 302 regime with companies that do not disclose them under the section 302 regime but subsequentlydisclose them under section 404. Using this sample, I examine firm governance characteristics relating to the disclosure of ICDs under section 302 of SOX holding constant the existence of a weakness.In designing the study in this way, I make the assumption that material weaknesses disclosed in company’s annual filings under SOX 404 existed throughout the fiscal year. I attempt to limit those observations where the control weakness was reported under section 404 but did not exist previously by looking at only the 3 quarters prior to the first 404 report to determine whether the observation was in the group disclosing under section 302 or the group not disclosing under section 302. This assumption is also in line with assumptions made in prior research as well as by professionals. For example, Glass-Lewis & Company argue, “In our view, the control deficiency probably did not appear overnight. Consequently, we feel that the problem most likely existed in prior quarter s”(Glass-Lewis & Co. 2005). Doyle et al. (2007b) argue that many of the internal control weaknesses “have existed for several years prior to their disclosure, if not since the firm’s incepti on.”Concurrent research examines the effect of corporate governance quality on the quality of internal controls. Hoitash (2009) finds evidence of a negative relationship between corporate governance quality and internal control disclosures under the section 404 regime. They find no such relationship under the section 302 regime.They conclude that corporate governance quality has little impact on internal control quality in a regime without the management and auditing requirements outlined in section 404.The next best alternative to corporate governance improving the quality of internal control over financial reporting is for them to at least disclose ICDs to investors so investors have more information with which to judge the quality of financial disclosures. The requirements in SOX sections 302 and 404 relate to the discovery and disclosure of ICDs. I extend the findings in Hoitash et al. (2009) by studying the relationship between corporate governance quality and disclosure of ICDs in an environment void of the requirement of an audit of internal controls.I define corporate governance to include the audit committee of the board ofdirectors, management, and the external auditor. These three parties, along with internal auditors, have been argued to be “the cornerstones of the foundation on which effective corporate governance must be built.”I focus on the audit committee of the board rather than on the board of directors as a whole because the audit committee is the sub-group of the board charged with overseeing the financial reporting process, which includes responsibility for internal controls.I find evidence that higher quality corporate governance improves the likelihood of disclosure of ICDs under the section 302 regime. I also find evidence that the accounting background of corporate governance parties improves the accuracy of the evaluation of the level of seriousness of the ICD (i.e. the classification of the ICD as a significant deficiency or a material weakness). In particular, I find that companies that were audited by industry leading auditors and that have audit committees with an accounting financial expert are more likely to have disclosed ICDs during the section 302 regime. I find a negative relationship between auditor tenure and the likelihood of internal control disclosures under the section 302 reporting regime. In additional analysis using only companies that disclosed ICDs under section 302 and disclosed a material weakness under section 404, I find that companies that have a CFO with accounting background are more likely to properly classify the deficiency as a “material weakness”rather than the less-serious “significant deficiency.”These findings complement the findings in Hoitash et al. (2009) who provide evidence that companies with higher quality corporate governance are less likely to have ICDs. This paper provides evidence that companies with ICDs are more likely to disclose them when their corporate governance is of higher quality. The findings also support the argument made by the Sub-Committee to the SECs Advisory Committee on Smaller Public Companies that attempting to improve financial reporting quality by improving corporate governance quality might be a less costly alternative to the audit of internal controls (SEC 2005).As noted previously, each of these studies focuses on the existence or absence of internal control problems. Very little research has considered the reporting behaviorprior to SOX- mandated audits of the companies that have weaknesses in their internal controls. Bronson, Carcello, & Raghunandan (2006) examine the characteristics of firms that issued voluntary management reports on internal controls in 1998, prior to the passage of SOX.A contemporaneous working paper also examines characteristics of companies that disclose control problems prior to SOX-mandated audits. Hermanson and Ye (2007) examine the relationship between companies providing ‘early warning’of material weaknesses and variables related to material weakness characteristics, financing incentives, and external monitoring for a group of companies receiving an adverse 404 audit opinion. They find significant relationships between disclosing control problems under section 302 and the following variables: the severity and number of material weaknesses, prior earnings restatements, future equity financing activities, auditor independence and effort, CFO change, the number of institutional investors, and the number of audit committee meetings.My study differs from theirs in that Hermanson and Ye (2007) focus on reporting incentives of companies prior to SOX 404 mandated audits. They examine variables related to upcoming debt and equity issuance, the characteristics of the weakness itself, and external monitoring of the firm. The focus of my paper is on governance factors related to the disclosure of ICDs.Additionally, I examine not only the reporting/nonreporing of ICDs but also how governance factors influence the accurate classification of the ICD (i.e. as a material weakness or significant deficiency).I examine the corporate governance quality impact on firm reporting of internal control deficiencies (ICDs) prior to SOX-mandated audits. I find companies that were audited by industry leading auditors, and that have higher quality audit committees are more likely to disclose ICDs under the SOX section 302 regime—prior to the mandatory audit of internal controls. I also find that companies that have a CFO with financial accounting experience are more likely to accurately assess the seriousness of ICDs and classify them properly as material weaknesses rather than the less-serious significant deficiencies.My findings suggest that the quality of the external auditor and audit committee impact the likelihood of disclosure of the ICD in the absence of external audit report requirements, while the CFOs accounting background directly impacts the accuracy of the assessment of the seriousness of the ICD.These results have implications for the current debate over whether smaller public companies should be exempted from the audit of internal controls as mandated by the Sarbanes- Oxley Act of 2002 (SOX) section 404. Specifically, some have argued that attempting to improve financial reporting quality by improving corporate governance quality might be a less costly alternative to the audit of internal controls (SEC 2005). I provide evidence that higher quality corporate governance does lead to a higher probability of ICD disclosure in the SOX 302 regime when audits of internal controls were not required. Additionally, my findings suggest that while improving the audit committee and the external auditor may help improve the likelihood of disclosures in a setting void of the external audit requirements, assuring the CFO has necessary experience and knowledge can impact the likelihood that ICD is reported at the correct level of seriousness.Contrary to expectations, I find that longer auditor tenure is associated with decreased likelihood of ICD disclosure under SOX 302. After controlling for recent auditor changes which might have been due to discovered internal control weaknesses, the results persist. This finding is consistent with the common argument that longer auditor/client tenure results in a lack of independence and therefore lower quality reporting. However, it could also be driven by companies with longer auditor/client relationships having less severe control problems that only surfaced when a thorough audit of internal controls was performed at year-end.Source: Nathaniel M. Stephens./abstract=1313339；August 28, 2009二、翻译文章译文：在萨班斯法案第302条下的公司治理质量的和内部控制报告该项关于影响公司治理结构的报表研究是基于没有外部审计事务的情况下进行的。

企业环境管理—基于市场奖励的管理Madhu Khanna and Wilma Rose Q. Anton企业保护环境的办法已经从被规章条例驱动的被动模式演变为积极主动的方式，即通过自愿管理做法，将环境问题与传统的管理职能结合起来。

作为公司决策的一种行为模式，通过econometrically假设测试取得影响公司积极进行环境管理的因素。

对这些假设进行测试时，使用的样本是标准普尔500指数公司的调查数据。

分析结果表明，经济因素，如环境负债的威胁和符合预期规定的高成本以及生产最终消费品和拥有大量资本产出率给企业带来的市场压力，都在促使这些企业进行环境保护的过程中发挥了显著作用。

此外，企业外部关于企业转移有毒物质的报道和社会大众对企业内部有毒物质单位排放量的压力都对企业通过创新实现环境管理的实践有重大影响。

导论传统上，美国依赖强制性的指挥和环境控制的规章来保护环境质量。

这种做法虽然保护了环境，但是也导致了政策框架的僵硬和高昂的成本，并且还会降低长远上改进环境质量的效率。

这种认识已经导致越来越多基于市场的手段应用于为企业提供灵活选择用最低成本控制污染的环境保护方式，例如排污许可证制度、存款还款计划和公众的环境信息披露自愿程序。

在这些措施中，信息披露的自愿性程序通过非强制性的措施鼓励企业控制污染。

监管机构向社会提供的关于产品环境属性和公司环境绩效的信息能触发产品和资本市场的反应和社会的行动，建立以市场为基础的激励机制，帮助企业改进其环境绩效。

美国环保局每年向社会公布的有毒物质排放清单就是信息提供的一个例子。

此外，争取让企业在环境自我调节的自愿性项目已经成为美国环保局的一个主要政策工具。

1999年，在联邦级别上，这样的项目已经在短短的三年中由28项增长到54项。

这两种做法已经被很多政策分析家看成是对抗性超越“政府推动”的“下一代环境政策”，其依靠企业自身在环境友好政策上的积极努力和社会公众，例如公民和社区的积极参与，来达到保护环境的目的。

Internal management, establish a sound internal control system, enterprises and the needs for enterprises to face market risks and challenges. Only in accordance with the actual situation of their own, developed to meet the needs of internal management control system, and strictly follow the implementation can be sustained, steady and healthy development.内部管理，建立健全内部控制制度，企业和企业面临的市场风险和挑战的需要。

只有按照自己的实际情况，开发出满足内部管理控制系统的需求，并严格遵照执行能够持续，稳定和健康的发展。

The so-called internal control, the means by the enterprises board of directors, managers and other staff implementation, in order to ensure the reliability of financial reporting, operating efficiency and effectiveness of existing laws and regulations to follow, and so provide reasonable assurance that the purpose of the course. Internal controls related to enterprise production and management of the control environment, risk assessment, supervision and decision-making, information and transfer and self-examination, from a business perspective on the whole in all aspects of production. Their effective implementation will undoubtedly promote enterprise production and management to a new level, to promote the rationalization of business processes and standardization.所谓内部控制，董事会的企业董事会，经理和其他员工实施的，为保证财务报告的可靠性，现有的法律法规，经营的效率和效果跟踪，并提供合理的保证，本课程的教学目的。

附录A公司治理与高管薪酬：一个应急框架总体概述通过整合组织和体制的理论，本文开发了一个高管薪酬的应急办法和它在不同的组织和体制环境下的影响。

高管薪酬的研究大都集中在委托代理框架上，并承担一种行政奖励和业绩成果之间的关系。

我们提出了一个框架，审查了其组织的背景和潜在的互补性方面的行政补偿和不同的公司治理在不同的企业和国家水平上体现的替代效应。

我们还讨论了执行不同补偿政策方法的影响，像“软法律”和“硬法律”。

在过去的20年里，世界上越来越多的公司从一个固定的薪酬结构转变为与业绩相联系的薪酬结构，包括很大一部分的股权激励。

因此，高管补偿的经济影响的研究已经成为公司治理内部激烈争论的一个话题。

正如Bruce，Buck，和Main指出，“近年来，关于高管报酬的文献的增长速度可以与高管报酬增长本身相匹敌。

”关于高管补偿的大多数实证文献主要集中在对美国和英国的公司部门，当分析高管薪酬的不同组成部分产生的组织结果的时候。

根据理论基础，早期的研究曾试图了解在代理理论方面的高管补偿和在不同形式的激励和公司业绩方面的探索链接。

这个文献假设，股东和经理人之间的委托代理关系被激发，公司将更有效率的运作，表现得更好。

公司治理的研究大多是基于通用模型——委托代理理论的概述，以及这一框架的核心前提是，股东和管理人员有不同的方法来了解公司的具体信息和广泛的利益分歧以及风险偏好。

因此，经理作为股东的代理人可以从事对自己有利的行为而损害股东财富的最大化。

大量的文献是基于这种直接的前提和建议来约束经理的机会主义行为，股东可以使用不同的公司治理机制，包括各种以股票为基础的奖励可以统一委托人和代理人的利益。

正如Jensen 和Murphy观察，“代理理论预测补偿政策将会以满足代理人的期望效用为主要目标。

股东的目标是使财富最大化；因此代理成本理论指出，总裁的薪酬政策将取决于股东财富的变化。

”影响积极组织结果的主要指标是付费业绩敏感性，但是这种“封闭系统”法主要是在英美的代理基础文献中找到，假定经理人激励与绩效之间存在普遍的联系，很少的关注在公司被嵌入的不同背景。

LNTU---Acc附录A论企业经营业绩评价系统的构建企业作为盈利性组织，其目标是追求经济效益，企业的经济效益集中体现在经营业绩上。

业绩，也称为效绩，绩效、成效等，反映的是人们从事某一活动所取得的成绩或成果，经营业绩是企业在一定时期内利用其有限的资源从事经营活动取得的成果，表现为企业经营效益和经营者业绩两方面。

《辞海》中对“评价”的解释是：“评定货物的价格、还价。

今也指衡量人物或事物的价值。

”价格是价值的货币表现，评价实际上是一个判定价值的过程，就如《现代汉语词典》中的解释：“评价”是“评定价值高低、评定的价值”，管理活动中的评价是指根据确定的目标来测定对象系统的属性，并将这种属性变为客观定量的价值或者主观效用的行为。

评价作为判定人或事物价值的一种观念性活动，包括确定评价目的、选定评价标准(或评价参照系统)，获取评价信息，形成价值判断四个环节。

企业经营业绩评价是指运用科学，规范的评价方法，采用特定的指标体系，对照统一的评价标准，按照一定的程序，进行定量及定性分析，对企业一定经营期间的经营效益和经营者业绩作出真实、客观、公正的综合评判。

它是评价理论方法在经济领域的具体应用，它是在会计学和财务管理的基础上，运用计量经济学原理和现代分析技术而建立起来的剖析企业经营过程，真实反映企业现实经济状况，预测企业未来发展前景的一门科学。

建立和推行企业经营业绩评价制度，科学的评判企业经营成果，有助于正确引导企业经营行为，帮助企业寻找经营差距及产生的原因，提高经济效益。

同时，也为各有关部门对企业实施间接管理，加强宏观调控、制定经济政策和考核企业经营管理者业绩提供依据。

企业经营业绩评价系统的构建与实施必须建立在一定的理论基础之上，符合一定的原则，才能发挥其良好的功能，从而使业绩评价“客观”、“公平”、“合理”。

1企业经营业绩评价系统的理论基础(1) 资本保全理论在市场经济条件下，企业是出资者的企业，是一个资本集合体，所有者是惟一的剩余风险承担者和剩余权益享受者，出资者利益是企业最高利益。

原文：Corporate Governance and Financial Performance of panies inPolandAbstractThe research presented in the paper is aimed at examining the relationship between the level of corporate governance and the financial performance of listed panies in Poland. The corporate governance degree is expressed by the outes of a rating of 20XX performed by Polish Corporate Governance Forum. The attempted models are of ordered multinomial type. Endogenous variable represents the rating oute (A-, B+, B, B-, and C+), while the exogenous variables include various financial indicators evaluated on the basis of the 20XX financial statements. The estimated ordered logit models show that the level of corporate governance of panies in Poland is associated with their ability to cope with the financial distress, as expressed by the degree of liquidity, profitability and the financial leverage variables. (JEL C10, O57, G30)Corporate Governance Ratings for Polish paniesFrom the perspective of a pany, the corporate governance means: independent and efficient supervising body, transparent and accurate books, strong shareholders’rights and equal treatment of all owners groups. Mechanism of corporate governance minimizes the agency costs, i.e., reduces the pany’s market value loss resulting from a potential conflict between the managers and the owners (Shleifer and Vishny, 1996).In Poland, the corporate governance questions have been addressed since the beginning of the first decade in 21st century, both legally and operationally. Good source of information on current issues in this area is Polish Corporate Governance Forum (PCFG) founded in 2000 by the Institute for Market Economics (.pl/). Warsaw Stock Exchange (WSE) has adopted the corporate governance principles on the Polish market since 20XX, with all listed panies declaring that they would observe most of the best practice rules (http://.gpw..pl/). Since then, the new document, entitled Best practices in public panies 20XX has beenaccepted for implementation. The Best practices express the corporate governance standing of WSE based on practical experience, opinions and suggestions of market participants over the period of 20XXY20XX and the recent European mission remendations in this field.Polish Corporate Governance Forum performed two ratings of the panies quoted on Warsaw Stock Exchange, the first in 2001 and the second in 20XX (Tamowicz et al., 2001; Dzierzanowski et al., 20XX). These two ratings are not really parable, since the authors significantly changed the scope and methodology for the second rating.The last rating of 20XX was carried out for 53 panies with largest capitalization on WSE. The data on legal standing of the panies’corporate governance issues were collected as of November 20XX. According to the authors’description, the 20XX rating was based Bon the analysis of statutes, internal regulations (by-laws) concerning functioning of supervisory and management boards and shareholders’meetings and content of the panies’websites. The very important sources of information were the panies’declarations of pliance with the Warsaw Stock Exchange Code and especially the mentaries to particular rules.Authors of PCFG rating indicate at least 60 characteristics that were taken into account for each pany in order to obtain appropriate picture of pany’s corporate governance level. The indicator variables for the rating were taken from the following areas:1.position and petence of supervisory board incl. independent boardmembers2.supervision over party-related transactions3.general shareholders meeting accessibility4.functioning of the management board5.Auditor’s independenceck of anti-takeover defences7.regulations on trading in own shares8.panies’declared goals and intentions9.transparency arrangements, including information available from thepanies’websites.The disclosed rating uses five categories from A- to C+. These were assigned to 53 panies. The authors indicate that the full range of categories include ratings from A to E. The rating is presented in Table 1. There are five panies rated C+, 17 panies with a B- rating, 14 panies with B, 13 with B+, and 4 with A-.Econometrics and the Corporate GovernanceTABLE 1：PCFG 20XX Rating of Corporate Governance for the panies Listed on WSEThe econometric research on corporate governance concerns mainly the relationships between various categories representing firm’s performance and the variables describing the governance level, such as ownership structure or the position of supervising body. Surveys of such research are presented, e.g., in Bhagat and Jefferis (20XX), Boersch-Supan and Koeke (20XX), and Gugler (2001). Main factors influencing the corporate governance level, which are usually considered in empirical research, are:1.position of the supervisory board (degree of dependence on management,board＇s structure)2.ownership structure (diluted ownership, concentration of ownership,corporate owners, institutional owners, managerial ownership)3.acquisitions (including managerial acquisitions) and CEO changing4.equity structure (debt structure)5.managerial pensationBoersch-Supan and Koeke (20XX) formulate a number of weak points of econometric research concerning corporate governance, such as:1.Structural Reverse Causality: For example, it is not clear what is thedirection of causality between ownership structure and firm’sperformance; more concentrated ownership can improve firmperformance, but the reverse relation is also possibleYfirms well assessedby the market could also attract investors.2.Missing Variables: In the area of corporate governance it is customary thatmajor explanatory variables may not be included into the model;moreover, the linear3.Specification of the equations excludes the presenceof higher order terms.3.Sample Selectivity: Most empirical studies on corporate governanceanalyze only the largest panies, usually the listed ones; such samples areselected by the performance variable and Y in effect Y the studies havesample selection bias.4.Measurement Error in Variables: For example, the pany’s performancecan be measured by different variables, such as market value, ROA, ROE,EBIT, Tobin’s Q; these variables are sometimes uncorrelated, i.e., theymeasure the same performance in different way.To properly deal with some of these dangers of econometric modeling in corporate governance it is necessary to use panel data on panies. Boersch-Supan and Koeke (20XX) indicate several such databases for Germany.Corporate Governance and Economic PerformanceThe recent survey of corporate governance in OECD countries (Corporate governance, 20XX) indicates that Bstudies that are considered to be best practice econometric techniques indicate that the corporate governance is an important determinant of performance (...).Survey authors quote three studies showing significant association between the level of governance and the firms’performance.In another study, Bøhren and Ødegaard (2001) analyze the relationship betweenTobin’s Q for the panies quoted on Oslo stock exchange in 1989Y1997 (217 panies by the end of 1997) and several variables representing corporate governance. Their results indicate e.g., that ownership concentration has negative effect on performance, while the effect of insider ownership is positive. Increasing board size and the use of nonvoting shares decrease performance. The direct ownership has stronger effect on performance than institutional or state ownership.Similar outes are presented in a study by Lehman and Weigand (2000) for the sample of 361 German panies in 1991Y1996. In their research, pany’s performance measured by ROA is related to a number of corporate governance variables. The panel regression results confirmed that ownership concentration has negative effect on ROA, while the positive impact of ownership concentration is found for firms with financial institutions as large shareholders.Corporate governance indices constructed for various countries also have been examined with respect to their association both with economic and market performance of panies. The examples may be found in Gruszczynski (20XX). In the next section, an attempt is made towards examining the relationship between the corporate governance rating and pany’s financial performance.Ordered LogitThe corporate governance rating represents a typical dependent variable suitable for ordered response models. The categories are ranked in ascending order and the distances between neighboring categories are not set as equal. For the exposition we assume that the observed corporate governance rating variable y can be equal to one of five rating categories, as appearing in the 20XX Polish rating.It is assumed that this ordinal variable y is related to the continuous latent variable y* that indicates the pany’s degree of corporate governance. The values of y* are unknown.The values of y* determine the oute represented by y in the following manner:y i =1 or C+ ifτ0≤y i * <τ1y i =2 or B- ifτ1≤y i * <τ2y i =3 or B ifτ2≤y i * <τ3y i =4 or B+ ifτ3≤y i * <τ4y i =5 or A- ifτ4≤y i * <τ5The τ’s are threshold s (cutpoints), with the values for exteme categories equal toτ0 =-∞andτ5=∞.The linear model for the unobserved y* is as follows:yi *=xiτβ+εiwhere xi is typical [(k + 1) *1] vector of values on k explanatory variables (plus constantterm) for the ith observation (ith pany).The use of the observed y values requires the assumption about distribution of errors εi. Let F be the cumulative distribution function (cdf). The probability of oute y = m (m = 1, ..., 5) can be written as:P(y i=m│x i, β, τ)=F(τm- x iτβ)-F(τm-1- x iτβ) whereτis the vector of cutpoints. In the equation for P(y i=m│x i, β, τ), the second term on the right-hand side is equal 0. Also, in P(y i=m│x i, β, τ), the first term equals 1.For the ordered probit model, errorεis distributed normally with a mean of 0 and a variance of 1. For the ordered logit model, errorεhas logistic distribution. For the sake of model’s identification, either constant term orτ1 is set as equal 0. In the ordered logit:F(τm- x iτβ)=eτm- xiτβ/(1+ eτm- xiτβ)The probability pi for each category of y for the ith pany (i = │1,2,...,n) is equal to:P(y i=1│x i, β, τ) if y=1…pi= P(y i=m│x i, β, τ) if y=m…P(y i=5│x i, β, τ) if y=5The pi’s lead to form the likelihood function, the max I mum of which is attained for the ML estimates of vectorsβandτ.Sample and ModelsFor the purpose of explaining corporate governance rating y of Polish listed panies, the ordered logit models were specified. Since the rating of 20XX was based on the November 20XX legal standing, the explanatory variables for financial performance were calculated on the basis of financial statements for the year 20XX.The sample includes 37 out of 53 rated panies. As many as 16 panies have been excluded from the sample: Eight banks, one other financial institution, two panies with the first quotation after January 1, 20XX, and five panies excluded for other reasons (data not accessible, financial statements with missing information).The endogenous variable y has been defined as:(1)variable CG with all five ranking categories appearing in originalsample;(2)variable CG1 with only three categories (first two and the last twohave been bined).The reason for considering also simpler ranking CG1 is the small size of the sample as pared to the number of parameters to be estimated in the logit model.There are 20 financial ratios that have been considered as explanatory variables. The ratios, calculated on the basis of the panies’ 20XX financial statements are as follows:Profitability ratios: P102 gross profit from sales margin, P202 operating profit margin, P302 gross profit margin, P402 net profit margin, ROE02 return on equity, and ROA02 return on assets.Liquidity ratios: L102 current ratio, L202 quick ratio, and L302 acid test.Activity ratios: A102 amount due turnover, A202 inventory turnover, A302 operating cycle, A402 liabilities turnover, A502 cash conversion cycle, A602 currentassets turnover, and A702 assets turnover.Debt ratios: D102 fixed assets cover ratio, D202 debt margin, D302 EBITDA/ financial expenses, and D402 debt/EBITDA.Source: Markek Gruszczynski*,“20XX.Corporate Governance and Financial Performance of panies in Poland”.International Advances in Economic Research, vol.12,pp. 251–259.二、翻译文章译文：波兰的公司治理与财务绩效摘要本文目的是研究波兰上市公司的治理水平和财务业绩之间的关系。

Boards of Directors as an Endogenously Determined Institution:A Survey of the Economic LiteratureBenjamin E. HermalinUniversity of California at BerkeleyandMichael S. WeisbachUniversity of IllinoisJune 15, 2000AbstractThis paper surveys the economic literature on boards of directors. Although a legal requirement for many organizations, boards are also an endogenously determined governance mechanism for addressing agency problems inherent to many organizations. Formal theory on boards of directors has been quite limited to this point. Most empirical work on boards has been aimed at answering one of three questions:1) How do board characteristics such as composition or size related to profitability?2) How do board characteristics affect the observable actions of the board?3) What factors affect the makeup of boards and how they evolve over time?The primary findings from the empirical literature on boards are: Board composition is not related to corporate performance, while board size is negatively related to corporate performance. Both board composition and size are correlated with the quality of the board’s decisions regarding CEO replacement, acquisitions, poison pills, and executive compensation. Finally, boards appear to evolve over time as a function of the bargaining power of the CEO relative to the existing directors. Firm performance, CEO turnover, and changes in ownership structure appear to be important factors affecting changes to boards. The NSF (Grant SBR-9616675) and the Willis H. Booth Chair in Banking & Finance provided financial support. We thank Kevin Hallock and Anil Shivdasani for helpful comments on an earlier draft, andHamid Mehran for encouraging us to write this paper. The authors can be reached athermalin@ and weisbach@.1. IntroductionMost large and even many small organizations are governed by a board of directors. Having a board of directors is one of the legal requirements for incorporation, and many non-incorporated entities have a governing board of some sort (e.g., a university’s board of regents). Why do boards exist? What do they do? Can they be “improved”? These questions get at the heart of governance, and to a certain extent, management. As such, they have become a source of much research.This paper surveys the research on boards of directors in the economics and finance literatures. Boards of directors are an economic institution that helps solve the agency problems inherent in managing any organization. Although they satisfy numerous regulatory requirements, they exist primarily because of the conflict of interests they help to address. Yet, formal economic theory on the board has been quite limited. For example, the characteristics of agency problems leading to boards as the equilibrium solution has not yet been specified. Nor have the conditions under which regulations of boards will lead to improvements.Despite the absence of formal theory, we have a strong sense of the underlying tensions surrounding boards. The major conflict of interest within the boardroom is between the CEO and the directors. The CEO has incentives to “capture” the board, so as to ensure that he can keep his job and increase his flow of rents. Directors have at least some incentives to monitor the CEO and to replace him if his performance is poor. We posit that the board evolves over time depending the nature of the bargaining position of each side in this conflict.To some extent, the vacuum in theory has been filled by empirical work on boards. The “cost,” of this approach, however, is that little of the empirical work on boards has been motivated by formal theory. Rather, it has sought to answer one of three questions:1) How do board characteristics such as composition or size affect profitability?2) How do board characteristics affect the observable actions of the board?3) What factors affect the makeup of boards and how they evolve over time?A key issue in this empirical work is how to proxy for the board’s degree of independence from the CEO. Much of this work starts from the often implicit assumption that observable board characteristics, such as size or composition, are related this level of independence.A number of empirical results have been documented fairly consistently. First, board composition, as measured by the insider/outsider ratio,1 is not correlated with firm performance. However, board size is negatively related to a firm’s financial performance. Second, board actions do appear to be related to board characteristics. Firms with higher fractions of outsider directors and smaller boards tend to make better decisions concerning CEO replacement, acquisitions, poison pills and executive compensation. Finally, boards appear to evolve over time depending on the relative bargaining position of the CEO relative to the existing directors. Firm performance, CEO turnover, and changes in ownership structure appear to be important factors affecting changes to boards.Two important issues complicate empirical work on boards of directors, as well as most other empirical work on governance. First, endogeneity is an important consideration that is often difficult to address empirically in these studies. Firm performance is both a result of the actions of previous directors and, itself, a factor that potentially influences the choice of subsequent directors. Studies of boards often neglect this issue and, so, obtain results that are1 Most directors can be classified as inside directors or outside directors. Inside directors are employees or former employees of the firm. They generally are not thought to be independent of the CEO, since the success of their careers is often tied to the CEO’s. Outside directors are not employees of the firm and usually do not have any business ties to the firm aside from their directorship. Outside directors are typically CEOs from other firms, or prominent individuals in other fields. Finally, about 10% of directors fall into neither category; often these are attorneys or businesspeople that have a longstanding relationship with the firm. These directors are usually referred to as “affiliated” or “gray” directors.hard to interpret. Second, empirical results on governance can often be interpreted as either equilibrium or out-of-equilibrium phenomena. While it is generally difficult to distinguish between the two interpretations in a given study, they often have drastically different implications for policy. For example, one of the most consistent empirical relations regarding boards of directors is that board size is negatively related to firm profitability. The out-of-equilibrium interpretation of this finding says that limits on board size should be encouraged, or perhaps even regulated. In contrast, the equilibrium interpretation of this result implies that some other factor is causing both board size and profitability, so that such regulation would be at best useless, and possibly counterproductive. Both endogeneity considerations and the equilibrium nature of the results should be carefully considered when evaluating any study of boards or any other aspect of corporate governance.Despite these issues, much has been learned about boards of directors in public corporations in the past 15 years. Yet, there is still much work to be done. This literature has proceeded in the opposite direction from the model taught in graduate school; the empirical literature on boards in public corporations is fairly well developed, while theory is still in its infancy. It is likely that subsequent developments in theory will lead to more sophisticated empirical tests of particular models. In addition, the governance of organizations other than for-profit corporations is a relatively unexplored area. Both theoretical and empirical work aimed at understanding these organizations is likely to be fruitful in the near future.Several caveats are in order. First, in surveying this literature on boards of directors, we emphasize the parts of it that we know best. We have tried our best to be fair to all authors, but nonetheless plead guilty to spending a disproportionate amount of space on our own work. We apologize if we have neglected your favorite paper or unintentionally misrepresented your work.Second, boards of directors are an important topic of research in many areas, not just economics. Especially important is work in the fields of management and law. We have omitted discussion of these literatures entirely. For a sample of work on boards from the management literature, see Kosnik (1990), Zajac and Westphal (1994), and Rediker and Seth (1995). From the legal literature, one particularly noteworthy study is Roe (1994). Macey and O’Hara (2000) provides a survey of the legal literature on boards of directors. Finally, boards of directors are only one element of corporate governance systems. See Shleifer and Vishny (1997) for a broader survey of corporate governance.2. Conceptual IssuesAs with so much of economics, Smith (1776) appears to be the first economist to address boards: “The directors of [joint stock] companies, however, being the managersrather of other people’s money than of their won, it cannot well beexpected, that they should watch over it with the same anxious vigilance [asowners] … Negligence and profusion, therefore, must always prevail, moreof less, in the management of the affairs of such a company” (p. 700).One hundred fifty-six years later, Berle and Means (1932) took a largely similar view: “… control will tend to be in the hands of those who select the proxycommittee and by whom, the election of directors for ensuing period will bemade. Since the proxy committee is appointed by the existing management,the latter can virtually dictate their own successors.” (p. 87)Both quotes point out the critical agency issues that have typically caught the economist’s eye. Until recently, however, economic theory was insufficiently developed to analyze such agency problems. But a “problem” it clearly seemed to be, and not only to economists. Much of the regulation of boards since Adam Smith’s day has been driven by a desire to solve this “problem.” Even today, the press regularly chides boards for being insufficiently vigilant guardians of other people’s money and being too much in management’s hands. Similarly, westill hear calls for “reforms.” For instance, the American Law Institute (1982), Lorsch and Lipton (1992), and Jensen (1993) have each made proposals that, if adopted, would impose restrictions on the workings of boards.Yet, one doesn’t have to hold a Chicago Ph.D. to ask, “if boards are so bad, why hasn’t the market caused them to improve or, even, replaced the corporate form with some less-problematic form of organization?” Or put differently, pointing out that an institution is not first-best efficient is not the same as demonstrating that outside regulation is needed. A reasonable possibility is that boards are the second-best efficient solution to the various agency problems confronting any organization with such a potentially large divergence in interests among its members. As a matter of economic theory, the conditions under which we could expect such regulation to be welfare enhancing are rather limited (see, e.g., Hermalin and Katz, 1993).Perhaps, then, before we rush to regulate boards, we should step back and ask to what problems are boards the solution? That is, why are there boards?2.1. Why are there boards of directors?One potential answer to the question of why boards exist is that they are simply a product of regulation. Between state incorporation laws and the stock exchange governance requirements, most firms are required to have a board meeting a multitude of requirements: It must have at least so many members, it must meet with at least some specified regularity, it may need to have various committees, and some fraction of the directors may be obligated to have some nominal independence from management.Yet, this can’t be the entire story. Governing boards are prevalent all over the world, in a variety of for-profit and nonprofit organizations; more importantly, the existence of governing boards predates these regulations. Furthermore, if they existed simply to satisfy regulatoryrequirements, they would represent deadweight costs on firms, which subsequent lobbying and petition presumably would have been eliminated, at least somewhere in the world. In fact, the available evidence suggests the contrary: Were boards a deadweight cost to the firm, then we should expect them to all be at minimum size as fixed by regulation. Yet, in practice, boards are generally much larger than required by law.Given their prevalence over time, across boundaries, and in different organizational forms, there must be an explanation for boards other than a regulatory-based one. A more plausible hypothesis is that boards are a market solution to an organizational design problem, an endogenously determined institution that has arisen to ameliorate the agency problems that plague any large organization. Whatever their virtues or problems, boards of directors serve an essential role in the market solution to the contracting problems inside of most organizations. We believe that viewing boards of directors from this perspective is the most useful way to study the way they are structured and function.Our point of departure is, then, that a board of directors is the equilibrium solution (albeit possibly second best) to some agency problems confronting the firm. But what agency problems? And why boards as the solution?The canonical agency problem is that between a firm’s owners, its shareholders, who are generally seen as unable to control management directly, and management, who, as Smith feared, tend to be insufficiently vigilant or trustworthy when it comes to other people’s property.One solution to this problem is to provide management with strong incentives contractually. But this begs the question of who provides these incentives and who ensures that the incentive contracts are structured optimally? In most large corporations the shareholders aretoo diffuse, rationally plagued by the free-rider problem, and, for the same reason, too uninformed to set managers’ compensation.This problem, and the underlying direct control problem as well, could be alleviated in situations in which a large outside shareholder has sufficient incentive herself to tackle them. Many models have, consequently, explored the role for a large outside shareholder (see Shleifer and Vishny, 1986, for example). While there are certainly instances in which large shareholders play an important governance role, this is also certainly not a universal solution.2 Moreover, the stage on which a large shareholder plays this role is often the board itself; that is, her power works through her position on the board or her control of some number of directors. Ultimately, the theoretical literature on boards will derive the board as part of the equilibrium solution to the contracting problem between diffuse shareholders and management.One idea for why boards emerged is that the directors’ mutual monitoring was critical for inducing shareholders to trust the directors with their money. For example, suppose that there were S of the shareholders’ dollars that potentially could be stolen, and that the penalty to a director (monetarily, criminally, or to reputation) was p, with S > p > 0. In addition, suppose that any director can costlessly prevent such theft. Then N directors will “steal” if S/N > p. Clearly, there exists an N > 1 such that stealing is a strictly dominat ed strategy. In a similar vein, Meissner (2000), has explored the issue of how bank directors in early 19th-century New England limited self-dealing. His argument is that the total amount of side payments a given director would have to make to his fellow directors to bribe them to approve a bad loan on his behalf would ultimately prove prohibitive vis-à-vis the gains the given director could expect. To be2 As institutions’ holdings have grown, they have played a much more active role monitoring management governance in recent years. See Karpoff (1998) or Carleton et. al (1998) for discussion of shareholder activism and recent evidence on large institutional shareholders’ efforts to change corporate governance.sure, these ideas are neither complete models, nor do they necessarily explain the continued existence of boards today.2.2 How are Boards Structured and What do they do?Even without a complete theory of why there are boards, we can still explore how boards are made up and what they do. Boards are generally made up of a mixture of insiders and outsiders; how is this mixture determined and what are the incentives of different directors? Conditional on composition, do boards function as they should; that is, is their performance optimal (at least in a second-best sense)?One modeling approach is to see the board as the “principal” to management’s “agent” in a classic principal-agent framework. Although such principal-agent modeling provides many insights, it is not particularly useful for explaining board-specific phenomena: For example, why the ratio of insiders to outsiders matters or changes; or why management seems to have such influence in the selection of directors?Outside directors are often thought to play the monitoring role inside boards. Yet, their incentives are not clear. Fama (1980) and Fama and Jensen (1983) emphasize the fact that they have incentives to build reputations as expert monitors.3 On the other hand, a reputation as a director who does not make trouble for CEOs is potentially valuable to a director as well. Moreover, as Holmstrom (1999) observes, wanting to be seen as doing the right thing and doing the right thing are not always the same. The set of incentives facing the outside directors that result from these divergent forces is an important underlying factor in many of the studies surveyed below.3See Kaplan and Reishus (1990) and Farrell and Whidbee (2000) for evidence on the reputation argument.Hermalin and Weisbach (1998) offer a more board-specific model. They focus on one of the primary board tasks, the hiring and firing of management. In their model, the board must decide whether to keep a CEO or to replace him. The firm’s performance provides a signal of the CEO’s ability, and the board may, if it chooses, obtain an additional, costly signal. The board’s inclination is, in turn, a function of its independence from the CEO. A board’s independence depends on a bargaining game between the board and the CEO: The CEO prefers a less independent board while the board prefers to maintain its independence. When the CEO has bargaining power—specifically when the CEO has demonstrated that he’s a “rare commodity” by performing exceptionally well—the board’s independence declines. Alternatively, poor firm performance reduces a CEO’s perceived ability relative to that of a potential replacement, increasing the likelihood that the board will replace him. This model derives a number of predictions about the dynamics of the CEO and board’s relationship. In particular, it predicts:1. A CEO who performs poorly is more likely to be replaced than one who performs well.2. CEO turnover is more sensitive to performance when the board is more independent.3. The probability of independent directors being added to the board rises following poorfirm performance.4. Board independence declines over the course of a CEO’s tenure.5. Accounting measures of performance are better predictors of management turnover thanstock-price performance.6. There should be long-term persistence in corporate governance.7. The stock-price reaction to management changes should be negative if the CEO is firedbased on private information, but positive if the manager is fired on the basis of publicinformation.8. A CEO’s salary should be insensitive to past performance at relatively low levels of pastperformance, but sensitive at relatively high levels of past performance.There is strong empirical evidence to support the first five of these: For instance, Weisbach’s (1988) results are consistent with the first two predictions; Hermalin and Weisbach’s (1988) results are consistent with the third and fourth predictions; and, likewise, the fifth prediction is supported by numerous studies, of which Weisbach (1988) is one example. To the best of our knowledge, the last three predictions have not been empirically tested.There are other stylized facts about boards that do not, as of yet, arise as equilibria from formal models.4 Why, for instance, are directors reluctant to challenge the CEO (see, e.g., Mace, 1986)? Why does board size appear to affect performance (Yermack, 1996)? Why are boards an effective way of supplying information to management, as some suggest (e.g., Mace, 1986)?Why are boards an effective way to groom future CEOs (Vancil, 1987)? As the trend towards careful modeling of economic institutions continues, boards will prove fertile ground for work.3. Empirical Work on Boards of DirectorsIn contrast to the relative paucity of theoretical work on boards, there is a large empirical literature on the subject. Excluding case-based studies (e.g., Mace, 1986 and Vancil, 1987), this research can be broadly characterized as estimating one or more of the equations in the system:a t+s = φc t + εt(1)p t+s = βa t + ηt(2)c t+s = µp t + ξt(3)4Some other models relating to boards of directors are Almazan and Suarez (2000), Hirshleifer and Thakor (1994) and Warther (1998).where c denotes a characteristic or characteristics of the board (e.g., composition and size), a denotes an action (e.g., dismissal of the CEO), p denotes firm performance (e.g., profits), t indexes time (s≥ 0), φ, β, and µ are parameters (more accurately function operators) to be estimated, and ε, η, and ξ denote the rest of the specification (plus errors). Typically, the entire system is not estimated simultaneously, so the joint endogeneity is handled using lags (i.e., s > 0) on the equation of interest. Observe, from the first two equations, that it is possible to directly study the relationship between board characteristics and firm performance; that is,p t+s = β(φc t + εt) + ηt(4)A number of studies have directly estimated this equation. Indeed, such studies are more prevalent than studies of the component equations (this is especially true for the “middle” equation of performance as a function of board actions).3.1.The Board’s Influence on Corporate PerformanceWe begin by reviewing the literature that has estimated the “composite” equation. Two board characteristics have been used as the independent variable: board composition (typically measured by the proportion of outside—non-management—directors on the board) and board size.3.1.1. Board Composition and Corporate PerformanceProbably the most widely discussed question regarding boards is “Does having more outside directors increase corporate performance?” A number of papers have addressed this question, using several methods. The first method has been to examine contemporaneous correlations between accounting measures of performance and the proportion of outside directors on the board. MacAvoy et. al. (1983), Baysinger and Butler (1985), Hermalin and Weisbach (1991), Mehran (1995), Klein (1998), and Bhagat and Black (2000) all report insignificant relationsbetween accounting performance measures and the fraction of outside directors on the board. A second approach, suggested by the work of Morck et. al (1988), is to use Tobin’s q as a performance measure, the idea being that it reflects the “value added” of intangible factors suchas governance. Hermalin and Weisbach (1991) and Bhagat and Black (2000) use this approach and find, as with accounting performance measures, there is no noticeable relation between the proportion of outside directors and q. Finally, Bhagat and Black (2000) examine the effect of board composition on long-term stock market and accounting performance. Once again, they do not find any relation between board composition and firm performance. Overall, there is little to suggest that board composition has any cross-sectional relation with firm performance.5 An important issue to consider when evaluating these studies is the endogeneity of board composition. Hermalin and Weisbach (1998) suggest that poor performance leads to increases in board independence. In a cross-section, this effect is likely to make firms with independent directors look worse, because it would have led to more independent directors on firms with historically poor performance. Both Hermalin and Weisbach (1991) and Bhagat and Black (2000) have attempted to correct for this effect using simultaneous equation methods. In particular, these papers lagged performance as an instrument for current performance. Still, even correcting for endogeneity in this manner, there does not appear to be an empirical relation between board composition and firm performance.The poor results in estimating the “composite equation” are not surprising—errors from both underlying equations are present, so the signal-to-noise ratio is low. In particular, firm performance is a function of so many different factors that it is difficult to imagine that the effect5 One exception is Baysinger and Butler (1985), who finds that the 1970 proportion of independent directors is positively related to 1980 return on equity. However, as Bhagat and Black (1999) emphasize, these authors use only a single performance measure and 10 years seems like an implausibly long time during which to observe performance improvements from something like board composition.of occasional board meetings, etc., would be detectable (especially as the case-study literature, e.g., Mace, 1986, Lorsch and MacIver (1989), suggest that the vast majority of these meetings result in no significant actions).A somewhat more successful approach has been to measure the impact on firm value of changes in board composition. Rosenstein and Wyatt (1990) examine the stock price reaction on the day of the announcement that outside directors will be added to the board. They find that that on average, there is a statistically significant 0.2% increase in stock prices on the announcement of these appointments.In many ways, the Rosenstein and Wyatt approach is a cleaner test of the relationship between board composition and ultimate value than the other studies considered above—the Rosenstein and Wyatt approach controls for all firm-specific effects and tests directly for the desired effect. Controlling for firm-specific effects is critical because—as Hermalin (1994) predicts and Kole (1997) and Hermalin & Wallace (1998) confirm—there is no reason to imagine that a specific board composition (e.g., percentage of outsiders) is optimal for all firms. Hence, the impact of board composition on performance could be difficult to identify cross-sectionally.On the other hand, there is a potential drawback to the Rosenstein and Wyatt approach. Suppose firms change their board structure only to improve their value. Then all change announcements, to the extent that they are unexpected, should cause a positive change in the stock price. If this is true, then the Rosenstein and Wyatt results tell nothing about the value of outsiders per se. On the other hand, if only the addition of outsiders increased firm value, while other changes were neutral or lowered firm value, then we need to ask why this is allowed to happen and why firms do not continually add outsiders to boost value. Rosenstein and Wyatt。