Assessing and Interpreting the Impact of Internal Control Mechanisms on the Firm’s Performance: An Applied Study

Abstract

The purpose of this study is to investigate the impact of Internal Control Mechanisms which are Ownership Concentration, Capital Structure and Growth Opportunities on both Financial and operational Firm’s Performance. Design/Methodology/Approach- A panel data regression analysis is conducted for the period 2010-2015. The researcher utilized a random-effects model to control firm size and time effects that may influence the performance of the firm. Findings- This study provides evidence that Internal Control Mechanisms have significant impact on the performance of the firm financially and operationally. Ownership Concentration and Growth Opportunities are positively associated with both the financial and Operational firm’s performance. Additionally, Financial Leverage (as a proxy for Capital Structure) is negatively associated with both the financial and operational performance of the firm.