The influence of internal control quality on corporate financial performance: An empirical analysis based on panel quantile regression model
List of Authors
  • Meng Xu , Ooi Kok Loang

Keyword
  • Internal Control Quality, Financial Performance, Heterogeneous Impact

Abstract
  • This study employs quantile regression to examine the heterogeneous impact of internal control quality on financial performance of 953 Mainland Chinese listed companies during the period from 2011 to 2020. The regression results are compared against those of OLS and fixed effects models. The study finds that internal control quality has a strengthening effect on return on assets (ROA), but the coefficient of internal control quality decreases as the quantile increases. Further analysis reveals that lower quantiles have a greater impact of internal control quality on ROA, while higher quantiles have a smaller impact, thus validating significant differences in the impact of internal control quality on ROA due to variations in internal control quality among companies. The findings of this study can encourage managers to pay more attention to internal control within their organizations. By improving internal control quality, companies can maintain a long-term competitive advantage in the market.

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