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| Control Right Transfer, Material Weaknesses in Internal Control and Enterprise Performance: Empirical Research Based on Enterprise Life Cycle Theory |
| ZENG Xiangfei1,LIN Zhonggao2 |
1. School of Economics and Management, Southeast University
2. School of Business, Anhui University of Technology
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Abstract Based on the dynamic perspective in enterprise life cycle, this paper analyzes whether control right transfer inhibit material weaknesses in internal control for the improvement of the enterprise performance through the study of the empirical data from Chinese A-share listed companies during the period from 2010 to 2015. We find that material weaknesses in internal control reduce the enterprise performance. Control transfer right has an inhibitory effect. However, the inhibition effect behaves differently during the different stages of the enterprise life cycle. The research results show that the transfer of control right of listed companies in China is an external governance mechanism. Although it has an inhibitory function on the negative effects of material weaknesses in internal control on enterprise performance, this function is affected by the important impact of the enterprise life cycle. It also reminds that managers should take the operating conditions of the enterprise into consideration when they make decisions, and choose the transfer of control right according to the different characteristics of enterprise life cycle for the effective function of the role of the external governance mechanism.
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Received: 15 March 2017
Published: 15 September 2017
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Corresponding Authors:
ZENG Xiangfei
E-mail: zxfahut@163.com
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2017, Vol. 37 
浙公网安备 33011802000512号