Impact Of Internal Control Quality On Business Performance

Along with the reform and improvement of China’s economic system,the internal and external environments of enterprises are constantly changing,and all kinds of risks are increasingly complicated.Against this background,business performance as an important indicator to measure whether enterprises operate well,has been attached importance by enterprises in various countries.And how to achieve the goal of improving business performance through internal governance is regarded as one of the research topics by countless domestic and foreign scholars.Among them,internal control,as an important tool of corporate governance,can improve the government’s environment,improve management efficiency,reduce costs,resist business risks,and achieve business performance growth.Therefore,based on the theory of internal control,principal-agent,asymmetric information and incomplete contract,this thesis explores the mechanism of internal control quality,cost stickiness and agency costs.In this thesis,the research background,existing problems are described,innovation and significance are analyzed,and the research ideas and content of this article are sorted out.Secondly,according to the previous theory,this thesis collates the domestic and foreign literatures about internal control quality,cost stickiness,agency cost and business performance,etc.Finally,the thesis analyzes the relationship between internal control quality and operation performance by using the method of descriptive statistics and correlation analysis.In addition,the agency cost,cost stickiness and other factors are introduced into the impact of internal governance quality on the performance of enterprises.On the basis of the above analysis,the main conclusions of this study are as follows:(1)The improvement of internal control quality helps to promote the improvement of business performance of the enterprise;(2)The improvement of internal control quality helps to reduce the cost stickiness of the enterprise;(3)The cost stickiness has a negative effect on the business performance of the enterprise;(4)The cost stickiness partially mediates the influence of the internal control quality on the business performance of the enterprise;(5)The agency cost has a regulatory effect,which weakens the positive effect of the internal control quality on the cost stickiness,and positively regulates the relationship between the internal control quality and the business performance of the enterprise;and(6)The agency cost can play a regulatory role in the intermediary chain of "internal control quality – cost stickiness – business performance of the enterprise".Finally,according to the results of the study,it is proposed that managers should strengthen the construction of internal control quality system,focus on cost control,and reduce agency costs by means of salary incentive,so as to promote the improvement of business performance.