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Information systems and internal control: evidence from China

Author

Listed:
  • Chun-mei Deng

    (Chongqing University)

  • Zhi Xiao

    (Chongqing University)

  • Ling Zhou

    (University of New Mexico)

Abstract

Chinese companies are required to disclose weaknesses in their internal control systems, including information system weaknesses. This paper evaluates the impacts of information system weaknesses on firm performance relative to other internal control weaknesses to provide firms guidance on the construction of internal control. The organizational information processing theory suggests that firms with greater operational complexity demand better information systems to meet their greater informational needs, i.e., the quality of information systems has a stronger effect on the performance of more complex firms. We find that the adverse effects of information system weaknesses on performance relative to other internal control weaknesses are stronger for firms with greater operational complexity, consistent with the organizational information processing theory.

Suggested Citation

  • Chun-mei Deng & Zhi Xiao & Ling Zhou, 2017. "Information systems and internal control: evidence from China," Electronic Commerce Research, Springer, vol. 17(3), pages 361-377, September.
    • Handle: RePEc:spr:elcore:v:17:y:2017:i:3:d:10.1007_s10660-016-9228-5
    DOI: 10.1007/s10660-016-9228-5
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    References listed on IDEAS

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    Cited by:

    1. Wenxiu Tang & Bing Zhou & Chuan Lin & Weiwei Chen, 2021. "Does the threshold of information disclosure improve corporate governance? Evidence from China," Electronic Commerce Research, Springer, vol. 21(3), pages 747-765, September.

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