An Empirical Study On The Relationship Between Internal Control And Financial Performance

With the rapid development of all kinds of enterprises in our country,many financialrelated news have been frequently reported,especially in the mid-1990 s,there were many negative financial-and performance-related news,such as tax evasion in China's paper industry,poisonous milk powder of Sanlu,aviation oil and other incidents,which reflected the weak internal control of some enterprises.The degree of internal control and the accuracy of its implementation methods are directly related to the survival of enterprises,which received increased attentions in the era of rapid development of capital market.Compared with foreign countries,the research on the correlation between financial performance and internal control started late in China,and the awareness of internal control of inland enterprises was weak.Based on 166 textile enterprises,this paper studied the relationship between internal control and financial performance,and provided reference value for internal control of related enterprises.This study has strong theoretical and practical significance.This paper focused on theory and empirical analyses.In theory,this paper searched for a large number of information about internal control and financial performance,collected relevant reports on bankruptcy due to weak internal control in enterprises,and elaborated the concepts of internal control and financial performance.In the empirical aspect,this paper carried out correlation and regression analyses on the internal control of 166 textile enterprises,studied the specific relationship between internal control elements and financial performance,and further tested the robustness of the results.The empirical results indicated that the financial performance was related to the internal control of enterprises,among which the control activities were the most obvious,followed by risk assessment,internal environment,information and communication,and internal supervision.Finally,specific measures to strengthen the internal control of enterprises and improve financial performance were proposed,which may provide some reference suggestions for further development of textile enterprises,and also have some guidance significance on the internal control of other enterprises in our county.