The Role of Internal Control in Firms’ Coping with the Impact of the COVID-19 Pandemic: Evidence from China

Zhu, Peiqing; Song, Jianbo

doi:10.3390/su13116294

Cited by 11 publications

(13 citation statements)

References 30 publications

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“…According to dynamic capability theory, when the uncertainty of the external environment increases, internal control can form good power checks, balances, and coordination mechanisms within the company, which improve the ability of firms to cope with crises and have stronger resistance during crises and higher recovery after crises. Our results are similar to Zhu and Song (2021) [9] and Hao and Zhang (2022) [47]; however, Zhu and Song (2021) emphasized the impact of internal controls on firms' financial performance, while this paper examines the value of internal controls in a crisis from an enterprise resilience perspective [9]. Hao and Zhang (2022)'s study concluded that internal control could reduce corporate risk and improve enterprise resilience in normal times [47].…”

Section: Conclusion and Future Prospects 61 Conclusionsupporting

confidence: 93%

“…However, relatively few studies have been conducted on the role of internal control during crises. Only Zhu and Song (2021) studied the role of internal control in firms' response to the impact of COVID-19 and concluded that internal control could mitigate the negative impact of the epidemic on firms' performance; the higher the quality of firms' internal control, the better the firm's financial performance in the epidemic journals [9]. Rikhardsson et al (2021) used the 2008 financial crisis to study the banking industry and found that internal control systems are the key to effective crisis response [10].…”

Section: Introductionmentioning

confidence: 99%

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The Value of Internal Control during a Crisis: Evidence from Enterprise Resilience

2022

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Internal control is an important internal governance mechanism of enterprises and plays an important role in preventing and controlling corporate risks. This paper utilizes COVID-19 shocks and uses data from listed companies in China for 2019–2021 in order to study the impact of internal control on enterprise resilience and its functioning mechanism. The findings show that internal control significantly improves enterprise resilience during a crisis. By using firm characteristic quantile regressions, it is found that under a crisis, larger firms with sufficient cash flow from operating activities are more protected by internal control and more resilient. Mechanistic analysis suggests that internal control further increases enterprise resilience by improving resource allocation efficiency, reducing operating risk, and increasing innovation output. Further analysis shows that government support can enhance the resilience of firms during crises through tax and fiscal policies; a better business environment enhances firms’ ability to withstand risks in crisis situations and helps them gain a competitive advantage in crisis situations. Based on this, this paper provides empirical evidence for revising and improving the internal control system of enterprises to reduce the negative impact of public health emergencies in the context of epidemics.

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Section: Conclusion and Future Prospects 61 Conclusionsupporting

confidence: 93%

Section: Introductionmentioning

confidence: 99%

The Value of Internal Control during a Crisis: Evidence from Enterprise Resilience

2022

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“…The main dependent variable is ROA, our proxy for firm performance. Referring to relevant research, firm performance can be mainly measured by financial performance and market performance, and financial performance more reliably reflects the real operating situation of the firm [57]. In this paper, we intend to measure the firm performance from the financial performance aspect.…”

Section: Measurement Of Firm Performancementioning

confidence: 99%

“…This test is mainly to distinguish between companies' efforts to promote the employment of people with disabilities and other CSR behaviors. As discussed above, many studies have focused on the firm performance implications of CSR activities, while most studies have confirmed that CSR will have a significant positive impact on firm performance [43][44][45][46]57,59]. Corporate social responsibility activities will produce a reputation effect [43,44] and improve the relationship with other stakeholders such as government and consumers [47,48], which is often related to higher financial performance.…”

Section: Considering Other Csr Behaviormentioning

confidence: 99%

Does the Inclusion of Disabled Employees Affect Firm Performance? Empirical Evidence from China

et al. 2022

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Disabled persons are the largest minority group in the world and an important part of the labor market. However, few studies use empirical methods to investigate the economic consequences of including disabled employees from the perspective of the demand side. Based on the background of China’s employment quota system for the disabled, and using a sample of Chinese Listed Companies from 2016 to 2020, this paper empirically tests the influence of including disabled employees on firm performance. The results show that there is a U-shaped relationship between the inclusion of disabled employees and firm performance. Firm size and social donation have a negative incentive effect, while average employee compensation has a positive incentive effect on the relationship between disabled employees and firm performance. The above results provide empirical evidence for companies to arrange a diversified labor force, and also provide a new perspective for policymakers to adjust policies to promote the employment of the disabled.

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“…The government should objectively evaluate the degree of low carbon economic development of enterprises, with a view to formulating corresponding standard incentives and punishment measures for them. Based on this, it is very important to establish a sound, reasonable and feasible low-carbon operation management indicator system (Zhu and Song, 2021). Through reasonable selection of indicators, comprehensively evaluate the information related to low-carbon operation of SMEs, and correctly measure the degree of low-carbon operation of enterprises.…”

Section: Introductionmentioning

confidence: 99%

Analysis on the digital transformation index system of enterprise’s low carbon business performance based on AHP-DEA

Xie

2023

Front. Energy Res.

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With the arrival of the low carbon era, enterprises, as the main body of the market economy, must take the road of low carbon operation whether to fulfill their social responsibilities or to seek enterprise development. However, Chinese enterprises started late to understand the low-carbon economy. So far, except for a few state-owned enterprises, some leading private enterprises and foreign-funded enterprises, they have made remarkable achievements in low-carbon emission reduction. Most enterprises in China have not realized the importance of low carbon emission reduction. In order to step out of the “high carbon” era and coordinate economic development and environmental protection, China must solve the problem of low-carbon transformation of small and medium-sized manufacturing enterprises. How to measure the degree of low carbon transformation, and how the government objectively evaluates the degree of low carbon economic development of enterprises, with a view to formulating corresponding standard incentives and punishment measures for them. It is urgent to establish a sound, reasonable and feasible low carbon operation management indicator system, and comprehensively evaluate the information related to low carbon operation of SMEs through reasonable selection of indicators. According to the connotation of low-carbon enterprises, the economic benefits of enterprises are closely combined with environmental benefits. A set of low carbon operation performance evaluation index system including economy, technology and environment has been constructed. The AHP index weight is calculated by establishing the AHP model and the Data Envelopment Analysis (DEA) index weight is calculated by establishing the DEA model. On this basis, the grey relational evaluation model based on AHP-DEA is established. Then the paper evaluates the performance of representative enterprises’ low carbon operation. Propose corresponding improvement suggestions for the problems reflected in the low carbon operation performance ranking of enterprises and the scoring of various indicators. The research results show that the algorithm has high efficiency and the accuracy of model evaluation is 95.51%. To a certain extent, this study makes up for the research results of the impact of digital transformation on corporate strategic performance, and also provides ideas for the research of corporate financial performance evaluation.

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The Role of Internal Control in Firms’ Coping with the Impact of the COVID-19 Pandemic: Evidence from China

Cited by 11 publications

References 30 publications

The Value of Internal Control during a Crisis: Evidence from Enterprise Resilience

The Value of Internal Control during a Crisis: Evidence from Enterprise Resilience

Does the Inclusion of Disabled Employees Affect Firm Performance? Empirical Evidence from China

Analysis on the digital transformation index system of enterprise’s low carbon business performance based on AHP-DEA

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