Journal of East China Normal University (Philosoph ›› 2017, Vol. 49 ›› Issue (2): 173-180.doi: 10.16382/j.cnki.1000-5579.2017.02.018

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Internal Control and Corporate Performance: Industry Clustering Analysis and An Empirical Test Based on Chinese Listed Companies

HUANG Xiao-lin1, CHEN Guan-ting2   

  • Online:2017-03-15 Published:2017-03-23

Abstract:

Based on the 12625 observations of the listed companies in China, this paper examines the relationship between internal control and corporate performance in accordance with the overall samples and industry samples. We find that there is a positive correlation between internal control and corporate performance in the overall listed companies and various industries samples. However, the impact of internal control on corporate performance is different in various industries: the impact is significantly stronger in the technology-intensive and labor-intensive industry than in the capital-intensive industry. Therefore, we suggest that policy makers should expand the scope of implementation of internal control standards, gradually promote the implementation of internal control standard in the SME board, GEM listed companies and large and medium-sized unlisted enterprises, and develop internal control guidelines for related industries when it is necessary. In addition, we suggest that the capital-intensive corporate management should establish an adaptive internal control system according to the characteristics of the internal control in order to improve corporate performance.

Key words: internal control, industry cluster, firm performance, listed company