Using unique survey data to measure corporate integrity, we examine the relation between corporate integrity and internal control quality. The results show that corporate integrity is significantly and negatively asso...Using unique survey data to measure corporate integrity, we examine the relation between corporate integrity and internal control quality. The results show that corporate integrity is significantly and negatively associated with internal control weaknesses. We find a substitution effect between informal and formal institutions for improving internal control quality. In other words, the negative association between corporate integrity and internal control weaknesses is more significant when the legal development or market competition is weaker.Furthermore, we find that more effective corporate governance can strengthen the relation between corporate integrity and internal control quality. These findings indicate that corporate integrity can improve the quality of internal control. Our findings also provide empirical evidence for the construction of stronger internal controls.展开更多
基金support from the National Natural Science Foundation of China(Nos.71332004,71272198,71602123,71502040)the National Social Science Foundation of China(NO.18VSJ082)+5 种基金from the Ministry of Education of Humanities and SocialScience Youth Fund of China(No.14YJC790097)Accounting Master Training Project of the Ministry of Finance of China(MOF No.15,2016)the Natural Science Foundation of Guangdong Province of China(No.2016A030313265)the Natural Science Foundation of Shaanxi Province of China(No.2018JM7011)the National Statistical Science Research Program of China(No.2016LY16)from the 2018 Scientific Research Program Funded by Shaanxi Provincial Education Department ‘‘Managerial Overconfidence and the Quality of Internal Control"(No.18JK0310)
文摘Using unique survey data to measure corporate integrity, we examine the relation between corporate integrity and internal control quality. The results show that corporate integrity is significantly and negatively associated with internal control weaknesses. We find a substitution effect between informal and formal institutions for improving internal control quality. In other words, the negative association between corporate integrity and internal control weaknesses is more significant when the legal development or market competition is weaker.Furthermore, we find that more effective corporate governance can strengthen the relation between corporate integrity and internal control quality. These findings indicate that corporate integrity can improve the quality of internal control. Our findings also provide empirical evidence for the construction of stronger internal controls.
