Internal Control, Industry Characteristics And Commercial Credit Financing

With the rapid development of China’s economy,a large number of enterprises are facing the difficulties of internal and external financing.Trade credit financing is an informal financing mechanism and it has the advantages of low cost and simple operation,which can effectively alleviate the difficulty of enterprises’ financing.The construction of internal control plays an important role in enterprises,and it has an important impact on the economic activities and resource allocation of enterprises.As an important financing decision for the enterprise,the trade credit financing will be affected by internal control.This paper mainly studies the impact of internal control on trade credit financing,and the impact of different industry characteristics and property rights on the relationship between the internal control and trade credit financing.First of all,through the literature review of trade credit financing and internal control,it finds that there are few literatures on the impact of internal control on trade credit financing,and the influence of industry characteristics on the relationship between the internal control and trade credit financing has a large research space.After conducting sample screening,this paper takes A-share listed companies in 2009-2017 as the research object.Firstly,it studies how the internal control of enterprises will affect the trade credit financing.Then,it studies whether there is a difference between internal control and trade credit financing.Furthermore,it studies on how the industry’s asset structure and industry competition will regulate the relationship between the quality of internal control and trade credit financing.The study found that:(1)There is a significant positive correlation between the internal control and trade credit financing.That is to say,the higher the quality of internal control of the enterprise,the more trade credit financing the enterprise obtains.(2)The interaction between the internal control and property rights is also significantly positively correlated with the trade credit financing.This shows that the positive correlation between the internal control and trade credit financing is more significant in state-owned enterprises than non-state-owned enterprises.State-owned enterprises also maintain their superiority in the field of trade credit,and non-state-owned enterprises are not only subject to "property discrimination" in the banking credit market in the financial system,but also in the field of trade credit.(3)Industry characteristics will significantly regulate the correlation between trade credit financing and the internal control.The industrial asset structure will weaken the positive correlation between the internal control and trade credit financing.When the proportion of tangible assets is higher,the positive correlation between the internal control and commercial credit financing will be weaker.The degree of industry competition will enhance the positive correlation between the internal control and trade credit financing.The degree of competition in the industry as a reverse indicator,when its value is larger,the industry is less competitive.When the industry is fiercely competitive,the positive correlation between the internal control and trade credit financing will be strengthened.