Information systems and internal control: evidence from China

Chun-mei Deng (), Zhi Xiao () and Ling Zhou ()
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Chun-mei Deng: Chongqing University
Zhi Xiao: Chongqing University
Ling Zhou: University of New Mexico

Electronic Commerce Research, 2017, vol. 17, issue 3, No 2, 377 pages

Abstract: 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.

Keywords: Information systems; Internal control weaknesses; China (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10660-016-9228-5

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