Research on the Impact of Internal Control on Enterprise Growth: Based on the Empirical Analysis of Equipment Manufacturing Listed Enterprises in China

Background and Aim: This study investigates the impact of internal control on the growth of equipment manufacturing enterprises in China. With the increasing emphasis on corporate governance and risk management, understanding how internal control influences enterprise development is essential. The research draws on the COSO framework of internal control, which outlines its components and emphasizes its role in enhancing operational efficiency and strategic alignment. This theoretical lens provides a foundation for examining whether enhanced internal control mechanisms contribute to improved corporate growth, particularly regarding differences between state-owned and non-state-owned enterprises. Ownership structure, including governance mechanisms and incentive alignment, may influence how internal control practices are implemented, thereby affecting their impact on growth. Materials and Methods: The study uses data from A-share listed equipment manufacturing enterprises in China from 2018 to 2022. Regression analysis, including multiple regression models with control variables, and comparative tests are employed to assess the relationship between internal control quality and enterprise growth. The analysis also explores the moderating role of property rights, distinguishing between state-owned and non-state-owned enterprises. Result: The findings reveal a significant positive correlation between internal control and enterprise growth. Strengthening internal control enhances core competitiveness, reduces operational, financial, and managerial risks, and fosters sustainable development. Further analysis indicates that property rights influence this relationship, with non-state-owned enterprises showing a more pronounced effect. This difference can be attributed to variations in governance structures, incentive mechanisms, and resource allocation between ownership types, which affect the implementation and effectiveness of internal control practices. Conclusion: Internal control plays a crucial role in promoting enterprise growth, especially in non-state-owned enterprises. Policymakers and corporate managers should prioritize improving internal control mechanisms to enhance competitiveness and reduce risks. This study contributes to existing internal control and corporate governance models by extending our understanding of how internal control influences enterprise performance in different ownership contexts. Future research could explore industry-specific variations and longitudinal effects to deepen our understanding of internal control’s impact on enterprise growth.