Open Access Journal Article

Internal controls and corporate technological innovation: Empirical evidence from Chinese listed companies

by Nannan Wang a  and  Dengfeng Cui a,*
a
School of Economics and Management, Shihezi University, Shihezi 832000, Xinjiang
*
Author to whom correspondence should be addressed.
JIE  2023 1(2):11; https://doi.org/10.58567/jie01020005
Received: 18 March 2023 / Accepted: 15 May 2023 / Published Online: 1 July 2023
View Full-Text
Download PDF

Abstract

As the underlying institutional design for enterprise risk management, it is important to study whether and how internal control affects enterprise technological innovation in the current context of increased economic policy uncertainty. Based on the principal-agent theory and information asymmetry theory, this paper explores the impact of internal control on corporate technological innovation using the listed company data from 2009-2019 CSMAR database, and obtains the following research conclusions: (1) the quality of internal control positively affects the corporate technological innovation. (2) The operational risk plays an intermediary role in the relationship between the internal control affecting the corporate technological innovation. (3) The degree of market competition positively moderates the impact of internal control on enterprise technological innovation. (4) Relative to non-stateowned enterprises and non-high-tech enterprises, the quality of internal control of state-owned enterprises and high-tech enterprises has a more significant impact on enterprise technological innovation. This paper enriches the consequences of the study of internal control on the one hand, and on the other hand, it provides a new perspective for improving technological innovation, and it provides certain guidance for further improving the level of corporate governance.

Keywords: Internal control quality; Technological innovation; Business risk; Marketability;
Copyright: © 2023 by Wang and Cui. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Share and Cite

ACS Style
Wang, N.; Cui, D. Internal controls and corporate technological innovation: Empirical evidence from Chinese listed companies. Journal of Information Economics, 2023, 1, 11. https://doi.org/10.58567/jie01020005
AMA Style
Wang N, Cui D. Internal controls and corporate technological innovation: Empirical evidence from Chinese listed companies. Journal of Information Economics; 2023, 1(2):11. https://doi.org/10.58567/jie01020005
Chicago/Turabian Style
Wang, Nannan; Cui, Dengfeng 2023. "Internal controls and corporate technological innovation: Empirical evidence from Chinese listed companies" Journal of Information Economics 1, no.2:11. https://doi.org/10.58567/jie01020005
APA style
Wang, N., & Cui, D. (2023). Internal controls and corporate technological innovation: Empirical evidence from Chinese listed companies. Journal of Information Economics, 1(2), 11. https://doi.org/10.58567/jie01020005

Article Metrics

Article Access Statistics

References

  1. Aghion P, Howitt P. Revisiting the relationship between competiton, patenting and innovation [J]. Advances in Economics and Econometrics,2013(6):451-455. https://doi.org/10.1017/cbo9781139060011.016
  2. Arrow K. Economic welfare and the allocation of resources for innovation [M]. [S. I.]: Princeton University Press, 2016. https://doi.org/10.1007/978-1-349-15486-9_13
  3. Ashbaugh S, H., Collins D. W. The Effect of SOX Internal Control Deficiencies on Firm Risk and Cost of Equity[J]. Journal of Accounting Research, 2009, 47(1): 1-43. https://doi.org/10.1111/j.1475-679x.2008.00315.x
  4. Baker S.R., Bloom N., Davis S.J. Measuring Economic Policy Uncertainty[J]. Quarterly Journal of Economics,2016,131(4):1593-1636. https://doi.org/10.1093/qje/qjw024
  5. Chen D.F. "The 14th Five-Year Plan and China's high-quality economic development[J]. International Finance,2021(05):8-10.
  6. Doyle J., Ge W., Mcvay S. Determinants of weaknesses in internal control over financial reporting[J].Journal of Accounting & Economics, 2007, 44(1-2):193-223. https://doi.org/10.1016/j.jacceco.2006.10.003
  7. Du M, Hou Y, Zhou Q, et al. Going green in China: How does digital finance affect environmental pollution? Mechanism discussion and empirical test[J]. Environmental Science and Pollution Research, 2022, 29(60): 89996-90010. https://doi.org/10.1007/s11356-022-21909-0
  8. Fang H.X., Chen Z.H. Can high-quality internal control effectively deal with idiosyncratic and systemic risks? [J]. Accounting Research,2015, (4): 70-77, 96.
  9. Fang H.X., Jin Y,N. Corporate governance, internal control and inefficient investment: Theoretical analysis and empirical evidence[J]. Accounting Research,2013, (7):63-69+97
  10. Hao X, Qu J. The role of financial drivers on regional economic resilience: Does information technology level matter?[J]. Journal of Information Economics, 2023, 1(2): 1-25. https://doi.org/10.58567/jie01020001
  11. Jiang F.X., Kim K.A., Nofsinger J.R. Product market competition and corporate investment: Evidence from China[J]. Journal of Corporate Finance, 2015, 35:196-210. https://doi.org/10.1016/j.jcorpfin.2015.09.004
  12. Li L., Zhang D. Internal control, management capability and financing constraints[J]. Technical Economy, 2019,(10): 10-16.
  13. Liao L., Liao G.M., Shen H.B. Business risk, promotion incentives and firm performance[J]. China Industrial Economy, 2009, (8): 119-130.
  14. Liu Q.L., Luo L., Zhang Y.M. CHEN Han-Wen. Executive centralization, internal control and accounting information quality[J]. Nankai Management Review,2013, (01):15-23.
  15. Meng Q.X., Bai J., Shi W. Customer concentration and corporate technological innovation: Enabling or hindering - a study based on individual customer characteristics[J]. Nankai Management Review, 2018, (121): 62-73.
  16. Ren S, Du M, Bu W, et al. Assessing the impact of economic growth target constraints on environmental pollution: Does environmental decentralization matter?[J]. Journal of Environmental Management, 2023, 336: 117618.https://doi.org/10.2139/ssrn.332681
  17. Ribstein L.E. Market vs. Regulatory Responses to Corporate Fraud: A Critique of the Sarbanes- Oxley Act of 2002. Social Science Electronic Publishing Social Science Electronic Publishing, 2002.
  18. Sun G.G., Yang J.F. Can high-quality internal control improve the transparency of accounting information? [J]. Research on Financial Issues, 2013, (7):77-86.
  19. Wang J.Y., Fu J.N., Zhang H.L. Product market competition and corporate innovation: a quasi-natural experiment[J]. Modern Finance and Economics (Journal of Tianjin University of Finance and Economics), 2019, (12): 52-66.
  20. Wang W, Yang X, Cao J, et al. Energy internet, digital economy, and green economic growth: Evidence from China[J]. Innovation and Green Development, 2022, 1(2): 100011. https://doi.org/10.1016/j.igd.2022.100011
  21. Wang X.L. Fan G, Yu J.W. China Sub-Provincial Marketization Index Report (2018) [M]. Beijing: Social Science Literature Press, 2018.
  22. Wang Y.C., Song S.L. Connected transactions, internal control and cash holdings[J]. Investment Research,2014, (06):55-67.
  23. Wang Y, Dai W.T. Internal control inhibits or promotes corporate innovation? --The logic of China[J]. Auditing and Economic Research,2019, (6): 19-32.
  24. Wen Z.L., Zhang Lei, Hou J.T. Mediated moderator variables and moderated mediator variables[J]. Journal of Psychology, 2006(03):448-452.
  25. Xu Y, Feng J.K. Internal control, executive incentives and innovation performance-an empirical study based on the effectiveness of internal control[J]. Soft Science,2017, (02):79-82.
  26. Yang Y, Khalid N A. Do policy coordination dynamics matter? A quantitative analysis perspective on China's scientific and technological policy evolution[J]. Journal of Information Economics, 2023, 1(2): 50-64. https://doi.org/10.58567/jie01020004
  27. Yu W.C., Liang P.X. Uncertainty, business environment and private enterprise business vitality[J]. China Industrial Economy, 2019, (11): 136-154.
  28. Zhang I. X. Economic consequences of the Sarbanes-Oxley Act of 2002. Journal of Accounting & Economics, 2007.
  29. Zhang X.L., Zhu M.M. Wang Hao. Internal control, institutional environment and corporate innovation[J]. China Circulation Economy, 2017, (5): 87-95.
  30. Zhang, Asia. Internal control effectiveness, financing constraints and firm value[J]. Research on Financial Issues, 2020, (11): 109-117.
  31. Zhao C.X., Zhang D.L. Research on the relationship between managerial power and corporate investment under the perspective of market competition[J]. Accounting Research,2013, (10):67-74+97.
  32. Zheng J, Lin Z.G., Peng Lin. Can high-quality internal control increase commercial credit financing? --A test based on the perspective of monetary policy change[J]. Accounting Research, 2013, (6): 62-68, 96.
  33. Zhou Z.G., Gao Y.P., Zhang S.G. Does business environment affect the cost of corporate credit[J]. Finance and Trade Economics, 2020, (12): 117-131.
  34. Zou J.X., Jia S., Qiu Y.J., et al. Business risk and corporate leverage[J]. Financial Research, 2020, (12): 20-39.