Internal Control Quality And Product Market Competition Advantage

Since the United States enacted the Sarbanes-Oxley Act(hereinafter referred to as SOX)in 2002,the significance of the internal control construction of enterprises has gradually been recognized by government departments and enterprises in various countries,and the academic circles have also conducted in-depth discussions on internal control as a research hotspot.As an effective mechanism of regulation,restraint and checks and balances,the implementation of internal control aims to realize corporate value,protect the interests of investors from damage,and promote the healthy and stable development of the capital market.China has also attached great importance to the internal control of enterprises,especially the promulgation of the "Basic Standards for Internal Control of Enterprises" in 2008 and the promulgation of the "Guidelines for Internal Control of Enterprises" in 2010,marking the basic completion of the internal control system of Chinese enterprises,becoming the milestone on the road to enterprise internal control construction.Compared with the SOX Act Section 404,which focuses on the financial reporting objectives of internal control,China's internal control basic norms put forward more functions and higher expectations for internal control.In addition to the financial reporting objectives,it also includes reasonable assurance of the legality of business management and asset security,improving operational efficiency and effectiveness,and promoting enterprises to achieve development strategies.Therefore,in the context of China's specific system,based on the product market,it is also important to study the role of internal control in the company's own production and operation and development process,such as improving operational efficiency and effectiveness,and promoting strategic goals.At present,the Chinese economy is in the stage of transition from high-speed development to high-quality development.The continuous changes in the macroeconomic environment and the continuous adjustment of the industrial structure make the survival and development of enterprises increasingly difficult.Therefore,in the context of the new economic normal,it is essential for companies to gain competitive advantage and achieve their strategic goals and maintain sustainable development.Since the beginning of the 21 st century,China's marketization process has been accelerating,marketization has increased significantly,and product market competition has become increasingly fierce.The importance of strategy in the business process has become increasingly prominent.The strategic goal is also the highest level of internal control of China's enterprises.However,the research on the economic consequences of internal control rarely considers its strategic effects.Based on this,this paper takes the 2013-2017 Shanghai and Shenzhen A-share listed companies as the sample,adopts the method of normative research and empirical research,and investigate the relationship between the internal control quality and the competitive advantage of the enterprise product market.It also studies the impact of the nature of corporate property rights and the industry competition,and further examines the differences in the impact of the five elements of internal control on the competitive advantage of the product market.This paper gets the following conclusions.First,internal control can enhance the competitive advantage of the product market and promote the realization of corporate strategic goals.Second,compared with state-owned holding companies,the internal control of non-state-owned holding companies can enhance the competitive advantage of the product market more.Third,the greater the degree of competition in the industry,the stronger the effect of internal control to enhance the competitive advantage of the product market.Fourth,the five elements of internal control have different effects on enhancing the competitive advantage of the product market.Specifically,the internal environment,control activities,and information and communication have significant effects on the promotion of product market competitive advantage,while the impact of risk assessment and internal supervision is not significant.The innovation of this paper lies in the following aspects.First,it studies the economic consequences of internal control from the perspective of product market competition,and then examines the impact of internal control on the realization of strategic objectives,which expands the research on the economic consequences of internal control,and provides new ideas to understand the meaning of internal control construction.Second,the nature of corporate property rights and the degree of competition in the industry are included in the research framework,revealing the impact of internal characteristics and external environmental factors on internal control to achieve its strategic objectives.Third,the internal control is further advanced to the five-factor level,which further analyzes the mechanism of the influence of internal control on enhancing the competitive advantage of the product market,and has certain guiding significance in the specific implementation level of the internal control construction of the enterprise.