An Empirical Study On The Impact Of Internal Control On Customer Stability

As the global supply chain network is developing rapidly,the idea of cooperation rather than competition is deeply rooted for most of the people.As the market gets more and more complex and competitive,how to acquire new customers and maintain the old customers is so crucial to the companies for their long-term development.As an effective management system,internal control has become more and more important as Chinese enterprises modernize and transform.In the past few decades,there has been already lots of research and practice both in academic and practical circles regarding with supply chain relationship and internal control system.Based on previous studies,this paper attempts to seek the impact of the internal control quality of listed companies on customer stability in the supply chain.Based on information asymmetry theory,agency theory and incomplete contract theory,this paper conducts empirical research on A-share listed companies which publicly disclose the top five customer information during 2012-2017.Through regression analysis of internal control quality and customer stability,the main conclusions are: high quality internal control can improve the stability of the company's customers,and the internal control quality at the non-financial reporting level has a more significant impact on the stability of customers than the internal control at the financial reporting level.Moreover,the concentration of customers of listed companies has a positive adjustment effect on the relationship between the two,that is,the higher the concentration of customers of listed companies,the more significant the influence of internal control quality on the stability of customers.Further research found that internal control has a greater impact on customer stability when the listed company is state-owned.The results support the null hypothesis after doing robustness test such as reverse causality test and replacement of control variables.This paper can not only enrich the literature related to internal control and supply chain relationship,but also help enterprises to maintain customers in the highly competitive market.