International Journal of Research Studies in Management
CollabWritive Special Issue
2024 Volume 12 Issue 2
Available Online: 15 April 2024
Author/s:
Ding, Ding
Graduate School, Lyceum of the Philippines University – Batangas, Philippines
Abstract:
Listed firms frequently rely on strong internal control systems and effective corporate governance structures as the foundation of their operations. While the individual effects of these pillars on corporate performance are well documented, the interaction of these two systems is less so. This study exposes this connection by developing a new index termed the Listed Companies’ Internal Control Index (LCICI), investigating its relationship with corporate governance frameworks, and, ultimately, its impact on corporate performance. Our findings suggest a revised strategy based on the interconnected strength of internal control and corporate governance, which drives the long-term success of publicly traded organizations. This study intended to establish the impact of the Construction of Listed Companies’ Internal Control Index on Corporate Governance Structure and Corporate Performance, which aided in the development of an enhanced Strategic Framework. The use of descriptive design in this research sheds insight on the relationship between internal control measures, corporate governance practices, and company performance. It helps to investigate such links and uncover potential linkages. The survey questionnaire was employed as the data collection instrument because it provides for consistent and standardized data collection, resulting in comparable responses from all respondents. The participants of the study came from six listed firms, and they gathered a total of 335 to be used as respondents in the research from a total population of 1669 using Raosoft. According to the study’s findings, the internal control index on strategic, operational, compliance, and asset security objectives is reliable and valid for measuring the effectiveness of internal control in a publicly traded company, implying that each index item is important and contributes significantly to the overall effectiveness of internal control. The internal control index of corporate governance structure is trustworthy and valid for measuring the effectiveness of internal control of purpose, people, and processes, implying that all index components are significant and contribute to the overall effectiveness of internal control of corporate governance. A corporation with a high level of profitability, liquidity, growth, and a strong stock market will be profitable because it can apply smart internal controls to maximize firm performance. The study found a significant correlation between the instrument, corporate performance, and governance structure of Chinese listed companies. Poor corporate governance can lead to breaches of duty, limiting the efficiency of internal control institutions and improving the strategic framework for internal control in China.
Keywords: internal control index, corporate governance structure, corporate performance, improved strategic framework
DOI: https://doi.org/10.5861/ijrsm.2024.1030
Cite this article:
Ding, D. (2024). Listed companies’ internal control index construction on corporate governance structure and corporate performance: Basis for improved strategic framework. International Journal of Research Studies in Management, 12(2), 203-218. https://doi.org/10.5861/ijrsm.2024.1030