Abstract:
The relationship between internal control quality and firm performance has been a key
topic in financial management and corporate governance. This study examines how internal
control quality affects enterprise performance in the financial industry, offering both
theoretical insights and practical implications for internal management and supervision. An
evaluation system for internal control quality is proposed, incorporating five dimensions:
control environment, risk assessment, control activities, information and communication,
and monitoring. Structural equation modeling is used for empirical analysis, based on data
from listed companies in China's financial sector. A robustness test using panel data ensures
the results are not influenced by time or individual effects. The findings reveal a significant
positive relationship between internal control quality and enterprise performance, meaning
that high-quality internal control can improve performance. Specifically, the control
environment and risk assessment have the most substantial impact on performance,
highlighting the importance of a strong internal control culture and effective risk
management mechanisms. The study also identifies differences in the relationship between
internal control and performance across various types of financial enterprises (e.g., banks,
securities, insurance), offering a new perspective on industry segmentation. This paper
contributes to understanding the connection between internal control quality and corporate
performance in the financial industry and provides empirical evidence for financial
enterprises to optimize internal control systems and enhance operational efficiency. Future
research could further explore the dynamic relationship between internal control quality
and performance, as well as the specific role of internal control in financial risk prevention
and control, offering deeper theoretical support for financial regulatory policies.
