Research On The Relationship Between Internal Control And Financial Performance

The relationship between internal control and financial performance has always been an important topic in the field of corporate governance.The ownership structure of listed companies is directly related to the effectiveness of corporate governance.China is constantly accelerating the opening up of the capital market,improving the international competitiveness of the capital market,promoting the formation of the "domestic and international double circulation" market pattern,and achieving highquality economic development.As an important participant in the capital market,the development quality of listed companies directly determines the growth rate of the capital market.The frequent occurrence of corporate financial fraud in China’s capital market is also driving market entities to continuously strengthen their own development quality,improve market competitiveness,and establish and improve the internal control system of major enterprises.The ownership structure plays a fundamental role in the improvement of corporate governance mechanism,and whether it can play a role in the impact of internal control on financial performance through influencing the internal governance mechanism of the company is worth studying.By combing and summarizing the relevant literature on financial performance,internal control and equity concentration,and defining the concept,this paper summarizes the core ideas of principal-agent theory,stakeholder theory,information asymmetry theory and signal transmission theory,and puts forward three research hypotheses: 1 There is a positive correlation between internal control and financial performance;2.Equity concentration plays a positive or negative regulatory role in the role of internal control on financial performance.Taking China’s A-share listed companies from 2011 to 2020 as the research sample,with the help of the fixed effect model,a panel data regression model of the regulatory effect of equity concentration in the impact of internal control on financial performance is established to test the impact of internal control and equity concentration on financial performance,as well as the regulatory effect of equity concentration in the impact of internal control on financial performance,and it is verified through the robustness test.The results show that: 1.The improvement of internal control can significantly improve financial performance;2.The improvement of equity concentration can effectively promote the improvement of financial performance;3.Equity concentration can play a significant positive role in the role of internal control on financial performance.Therefore,from the perspective of government and enterprises,this paper puts forward suggestions to promote internal control in improving financial performance: 1.improve the legal system,improve information disclosure,and optimize the investment environment;2.Strengthen the supervision and punishment of listed companies’ illegal behaviors;3.Establish an efficient internal control and supervision mechanism;4.Optimize the equity structure of listed companies and improve the voice of major shareholders.Based on the perspective of equity structure,this paper studies the mechanism of internal control on the financial performance of listed companies with equity concentration as an adjusting variable,and confirms the regulatory effect of equity concentration;This study enriches the theoretical research on internal control and financial performance,and puts forward suggestions for improving the corporate governance level and financial performance of listed companies.