Research On The Influrnce Of Internal Control Quality Of Private Small And Medium Enterprises On Underinvestment Under The Conditions Of Financing Constraints

Since the outbreak of the financial crisis in 2008,the economic environment has been in a state of instability,which is very unfavorable to the development of enterprises,especially to the development of private small and medium enterprises which brings greater obstacles.Foreign investors and banks and other lenders,taking into account the safety of their own funds,have raised the conditions for private small and medium enterprises investment or loans.For this reason,private small and medium enterprises are subject to great financing constraints.It is difficult for them to get sufficient funds in rational cost to apply to investment,resulting in insufficient investment,which will adversely affect the long-term development of the enterprise.Under the circumstances,private small and medium-sized enterprises must open up new ideas in order to seek development chances.Since it is difficult to change the external economic environment alone,enterprises can focus on changing themselves,by improving the quality of internal control to ease the financing constraints and then reduce investment shortage.The quality of internal control is very important for different types and sizes of enterprises.But comparatively speaking,in the same external economic environment,financing constraints on large state-owned enterprises are not very obvious.Therefore,this paper mainly focused on private small and medium-sized enterprises as the research object,studied the development of their internal control,the degree of financing constraints and their impact on insufficient investment.This paper defined the quality of internal control and financing constraints,and then analyzed the relationship between internal control quality,financing constraints and underinvestment,and put forward the research hypothesis.We selected small and medium-sized listed companies from CSMAR database and Wind database as sample,which were underinvestment from 2012 to 2015,established multiple regression model and used SPSS22.0 to do empirical test.After theoretical analysis and empirical test,it is concluded that external financing constraints are positively correlated with the degree of underinvestment,while the quality of internal control is negatively correlated with the lack of investment.Then,the cross-variables are used to verify the interaction between the internal control quality and the financing constraints.The results showed that internal control quality can reduce the problem of underinvestment by adjusting the financing constraints.In order to improve the reliability and robustness of the results,this paper has taken the robustness test of the event study and the multiple regression result.The result is consistent with the previous model,which proves that the conclusion of this paper is credible.The conclusion of this paper provided an effective way for private small and medium-sized enterprises to alleviate financing constraints,reduce underinvestment problems,and promote the healthy and long-term development of enterprises.