Research On The Impact Of Internal Control Based On Earnings Management On Corporate Investment Efficienc

The goal of financial management of modern enterprises is to maximize shareholders’ wealth,and investment,as one of the core financial activities of enterprises,largely affects the operational efficiency of enterprises and even determines their long-term future development.However,current academic research results show that the investment efficiency of Chinese enterprises is generally low,which is not only detrimental to their own business development at the micro level,but also seriously slows down the capital market from the macro level.According to the existing literature,agency problems and information asymmetry are two factors that cause inefficient corporate investment.The existence of these two problems also provides incentives and conditions for earnings management,which seriously interferes with the use of relevant information by investment decision makers to make judgments,thus leading to under-investment and over-investment by enterprises,further exacerbating the problem of inefficient investment.Internal control can effectively curb management’s earnings management behavior,narrow the information gap between internal and external parties,and also limit management’s private profit-seeking behavior,easing the conflict between principal and agent,and enabling enterprises to improve their investment efficiency.The text first reviews the research results of domestic and foreign scholars on internal control,surplus management and investment efficiency,and explains the current status and shortcomings of domestic and foreign research on this topic.Three hypotheses are proposed and modeled on the basis of relevant conceptual and theoretical analysis.Using a sample of A-share listed companies from 2007 to 2021,the impact of internal control quality on corporate investment efficiency and the mediating effect of earnings management are empirically analysis.The following research conclusions are drawn: the improvement of internal control effectiveness is conducive to reducing the level of accrual and true earnings management,and the reduction of the level of accrual and true earnings management will reduce the over-investment and under-investment problems of enterprises and promote the improvement of investment efficiency.Internal controls are more effective in improving investment efficiency when the quality of external audit is low and the level of financing constraints is high.Finally,we provide reference suggestions for listed companies to improve their internal control systems and enhance corporate investment efficiency from both internal governance and external supervision levels.