Effectiveness of Internal Control, Financing Constraints and Corporate Value

Abstract

Internal control plays an important role in corporate governance, and it will have an important impact on enterprise value. This paper chooses 16362 samples from 2009 to 2016 in Shanghai and Shenzhen as the research object, discusses the influence mechanism of the effectiveness of internal control on the enterprise value, and explores the effect path of the effectiveness of internal control on enterprise value from the perspective of financing constraints. The results show that: first, the effectiveness of internal control contributes to the value creation of enterprises, after using 3SLS and fixed effects model to control possible endogeneity problems, the conclusions are still robust; second, financing constraints are effective paths for the effectiveness of internal control to influence enterprise value. The effectiveness of internal control can help enterprises achieve value growth by easing the financing constraints of enterprises. This paper enriches the theory of the internal control of the economic consequences, reveals the governance effectiveness of financing constraints in the effectiveness of internal control ,and provides useful inspiration for promoting China's internal control construction.

Keywords: Effectiveness of Internal Control, Enterprise Value, Financing Constraints, Function Path