The Research On Effectiveness Of Internal Control And Corporate Performance

Currently, business failure occurred from time to time due to the failure of internalcontrol. Internal control problems will bring great disaster to its own. While somecompanies have established institutions and personnel related to the implementation ofthe internal control functions, but whether these institutions can really play a role stillunknown. Many corporate internal audit departments also just a decoration, theimportance of internal control is still not attracted enough attention to the company’ssenior leadership. In this situation, we will thoroughly examine the effectiveness ofinternal control and corporate performance, the purpose is to cause the attention of thecompany’s high level of internal control. Eventually, the enterprise will able to establishsound affordable effective internal control system, to escort for the fast and steadydevelopment of the enterprise.The paper selected based on70non-cyclical listed companies in the year from2009to2011as the study sample.In this article, we will review the relevant literature, andthen in the basis of carding the knowledge of internal control effectiveness and companyperformance, we raised the assumption of this article, and rebuild the evaluation indexsystem of internal control, to quantify independent variable effectiveness of internalcontrol. We use multi-index to measure dependent variable of corporate performance, weuse Principal Component Analysis and Factor Analysis to extract the common factorsfrom the six indicators we selected, to get scores for these common factors. Finally wegot the comprehensive index CP that on behalf of the company performance. We use themultiple regression to analysis the effectiveness of internal control and corporateperformance of listed companies. We concluded that: in terms of non-cyclical listedcompanies, there existence a significant positive correlation between effectiveness ofinternal control and results of these companies，enterprises should strive to improve thelevel of effectiveness of internal control, so as to enhance their own performance.