A Study On The Impact Of Internal Control Quality On Enterprise Growth

China is currently in the phase of economic transition. Though the economic reform has progressed, the enterprises of China lack a sound external environment due to the imperfection of the capital market, the laws and regulation system. To achieve a long-term sustainable and stable development, enterprise must be able to promptly identify and prevent the risks. Regarding to the enterprises, the establishment and improvement for their risk management and control system is essential. The establishment for a sound risk control system highly depends on the establishment for a sound internal control system. After the incident of China Aviation Oil, CITIC Pacific and other companies due to the failing of internal control, the Chinese government ministries and regulators have promulgated a series of internal control standards, guidelines and other supporting policies, which aim at encouraging and guiding the Chinese Listed Companies to establish a sound internal control system, improve their quality of internal control, enhance their management skills and risk prevention abilities, boost the company's operating effectiveness and efficiency, and promote the sustainable development.At present, for the domestic and overseas scholars who are studying the impacts of Internal Control Quality on the finance of enterprises, most of them only consider the short-term impacts on the economic benefits, but neglecting the impacts on the long-term performance and the Enterprise Growth. As the effect of Internal Control Quality has the nature of hysteresis, it is recommended to investigate the effect of Internal Control Quality on the long-term development. This paper describes the correlation between the Internal Control Quality of listed companies and their Enterprise Growth from the aspect of the long-term development, aiming to enrich and expand the researches in the related areas, as well as to evaluate the effectiveness of the government policies and the results of implementation. In addition, the Chinese Listed Companies lack initiatives on the execution of relevant policies and regulations. Therefore, the objective of this paper is to promote the awareness and initiative of the Chinese Listed Companies on strengthening and perfecting their internal control system, by studying the correlation between Internal Control Quality and Enterprise Growth.This paper reviews and summarizes the definition and measuring standards for the Internal Control Quality and Enterprise Growth from previous research work. The most widely recognized “DIB?Internal control index of Chinese Listed Companies” is selected to measure the internal control quality. The “factor analytical method” is employed to design the indicator system to measure Enterprise Growth. The correlation between the Internal Control Quality and Enterprise Growth is analyzed. Therefore the specific hypotheses for this paper is obtained, which is then tested by multiple regression analysis. Finally conclusion is obtained and the potential applications are proposed, based on empirical analysis.The research conclusions include: Firstly, the correlation between Internal Control Quality and Enterprise Growth is significantly positive; Secondly, relative to the private-owned listed enterprises, the correlation between Internal Control Quality and state-owned Enterprise Growth is more significant positive; Thirdly, the lower the degree of marketization, the more significantly positive the correlation between Internal Control Quality and Enterprise Growth is; Fourthly, under the environment of low marketization, the positive effect of the high-quality of Internal Control to state-owned Enterprise Growth is greater than the positive effect to private-owned Enterprise Growth; However, under the environment of high marketization, the positive effect of the high-quality of Internal Control to state-owned Enterprise Growth and private-owned Enterprise Growth has little difference.