Research on the Impact of Enterprise Digital Transformation on Internal Control

Digital transformation is a crucial strategy for enterprises to achieve improvements in quality, efficiency, and dynamism. It represents the key direction for enterprise innovation and reform, and it is also of great significance for promoting high-quality economic development. While the previous research has shown that digital transformation can affect business efficiency, performance, and corporate governance, there is a lack of literature clearly linking digital transformation to internal control. To determine whether enterprise digital transformation impacts the constructions and implementation of internal control, we analyze data from Shanghai and Shenzhen A-share listed companies between 2012 and 2019. Our study found that the extent of digital transformation in enterprises has a positive impact on the establishment and effectiveness of internal control. Furthermore, we examine the role of market competition in the relationship between the digital transformation and internal control. We found that the impact of digital transformation on internal control is limited in enterprises with relatively mild market competition, while in more fiercely competitive markets, the positive impact of digital transformation on internal control is more pronounced.