Ownership Concentration,Internal Control And Corporate Performance

In recent years,large and medium-sized transnational operation enterprises at home and abroad have been exposed to financial fraud one after another,which has attracted widespread attention.The main reason for this is that the internal governance structure of the enterprise is inadequate,and internal controls are confusing and inefficient.The ownership concentration,as the basis of the enterprise’s internal governance structure,intuitively reflects the distribution of the ownership of the enterprise,which on the one hand affects the effectiveness of the enterprise’s internal control,and on the other hand can also act on the corporate performance.Internal control,as a system and method implemented within an enterprise to safeguard assets and accurate information and to improve the efficiency of resource integration,is an important tool for evaluating the corporate governance environment and has an undeniable impact on enterprise performance.It is therefore clear that there must be a certain transmission connection between equity concentration,internal control,and enterprise performance.Based on the backdrop of globalization of economy and "Going Global" policy,integrating the demands of the new development pattern of domestic and international double cycle,transnational operation enterprises are playing a higher and higher role in China’s economic development.However,transnational operation enterprises not only have to deal with the fierce international market competition,but also have to face the complicated and severe international situation,and a reasonable ownership concentration and perfect internal control are crucial to the performance and stable development of enterprises.Therefore,the necessity of exploring the relationship between ownership concentration,internal control and corporate performance in the context of transnational operation enterprises in China is self-evident.Based on the above background,this paper composes the literature related to ownership concentration,internal control and corporate performance from three aspects.Firstly,the effect of ownership concentration on corporate performance,secondly,the effect of ownership concentration on internal control,and thirdly,the effect of internal control on enterprise performance.According to the present research results,most authors study the effects between two of the three: equity centralization,internal control,and enterprise performance,but there is little literature that systematically studies the relationship among the three.Thus,combining the separation of powers theory,principal-agent theory and other related theories,this paper proposes a research hypothesis and screens a total of 5,893 research samples of A-share listed companies in transnational operation enterprises in China from 2017 to 2021 to investigate the relationship among the three,namely,ownership concentration,internal control and corporate performance.This paper establishing an empirical model of "OC-IC-CP" with corporate performance as the explanatory variable,ownership concentration as the explanatory variable,and internal control as the mediating variable.And then examine the mediating effect of internal control on ownership concentration and firm performance in transnational operation enterprises in China.Through the empirical study,this paper concludes the following:(1)Ownership concentration of transnational operation enterprises is significantly and positively related to corporate performance,and increasing the ownership concentration has a facilitating effect on corporate performance.(2)Ownership concentration of transnational operation enterprises is significantly and positively related to internal control,and increasing the ownership concentration has a catalytic effect on internal control.(3)Internal control of transnational operation enterprises has a significant partial mediation effect on ownership concentration and corporate performance.Based on the above findings,it is clear that a reasonable ownership concentration and an effective internal control system are always the soul of transnational operation enterprises in China,which is the guarantee for their survival and development in the fierce market competition.Finally,this paper suggests that transnational operation enterprises in China should maintain an appropriate ownership concentration,establish and improve the internal control system of enterprises.