The Interaction Of Corporate Social Responsibility And Internal Control On Financial Performance

In recent years,with the development and expansion of pharmaceutical companies,some drug safety incidents have caused widespread concern in the society.As a link to promote the social and economic development,and a good medicine to protect people's lives and health,pharmaceutical manufacturing enterprises have a long way to go to corporate social responsibility.China's company law and some international standards also explicitly require that the enterprises must take their social responsibilities.However,the financial goal of the enterprise is to maximize the profits,the shareholders' rights or the value of the enterprise.Driven by interests,enterprises are unwilling or seldom to fulfill their social responsibilities in pursuing their own interests.Therefore,the contradiction between social responsibility performance and financial produce.But due to the failure and imperfection of the social responsibility mechanism which results from the failure of the internal control,the social responsibility can not be effectively implemented by the corporations.The guide to Internal control application also sets high demand for fulfilling social responsibilities.Only in a good internal control environment,enterprises can find a balance between their own performance and social wealth.Thus,the combination of the social responsibility,the internal control and the corporate financial performance is inevitable in the study process.Although the business model of these enterprises is rather special,the products of pharmaceutical companies are really life-related,which result in their social responsibility performance being peculiar compared with other industries.From the implementation of "new medical reform" in 2009 to the opinions on promoting the reform of medical service prices promulgated by the state in 2016,it is enough to find our country's emphasis on the pharmaceutical manufacturing industry.Based on this,we selects the listed pharmaceutical enterprises as the research sample,and uses factor analysis method to construct the comprehensive index of the corporate financial performance.According to the stakeholder theory,the corporate social responsibility is embodied into eight dimensions: shareholders,creditors,employees,suppliers,consumers,government,social welfare and environment,which are used to construct a composite index of the corporate social responsibility by the principal component analysis method.What's more,this paper applies multiple regression to building an interaction model in order to deeply analyze the impact mechanism of the corporate social responsibility,the internal control and the financial performance.It has been shown by researches that both the corporate social responsibility and the internal control in the pharmaceutical industry can have a significant positive impact on the improvement of financial performance.Not only does the internal control positively regulate the relationship between the corporate social responsibility and the financial performance,but the corporate social responsibility can also positively regulate the relationship between the internal control and the financial performance.In other words,when the corporate social responsibility and the internal control work together,their interaction is more effective at boosting the financial performance.From this view,it's contributed to the promotion of the social responsibility and the construction of the internal control.In addition,the interaction of the corporate social responsibility and the internal control benefits the enterprises,which is very meanful for the theoretical guidance and practice in real life.