Abstract:This paper studies the relationship between management power and internal control effectiveness from the perspective of ownership system using the data of Chinese firms listed in Shanghai and Shenzhen A Stock market from 2009 to 2012. We find that management power is positively significantly related to internal control effectiveness for local state-owned firms. For central state-owned-firms, there is no strong correlation. This means that the fierce political competition between local governments results in that state governments give more residual control rights to management and this also motivates the entrepreneurship of management, which is good for the construction of enterprise internal control. We also find that management power and internal control quality has positive correlation for family firms. That is because the manager is also entrepreneur and the ultimate controller has the essential attributes of the entrepreneur. However, we fail to find close relationship between management power and internal control quality private enterprises listing by merging and restructuring.