Abstract: The complex decision about internal control requires the management to have high ability to design and operate the internal control effectively. The implementation effect of internal control also depends on the enthusiasm and efforts of management. Using a sample of Chinese listed firms during 2012-2015 in Shenzhen and Shanghai markets, this paper empirically tests the relationship between managerial ability and internal control quality, management incentive and internal control quality, the interaction of managerial ability and management incentive to internal control quality. We find that higher management ability can improve the quality of internal control, and the above effect is more obvious in listed companies with appropriate management incentives;effective management incentive is helpful for mobilizing their enthusiasm and efforts to implement internal control and improving the quality of internal control, and equity incentive is more effective;there is a synergistic effect between management ability and incentive in improving the quality of internal control, and equity incentive can better play a positive interaction with management ability in promoting the quality of internal control. The above conclusions have important implications for improving the quality of enterprise internal control, recruitment of manager and the design of incentive mechanism related to internal control.

Key words: managerial ability, management incentive, internal control quality