Internal Control Effectiveness, Relationship Trading and Corporate Reputation
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Different from the previous study of reputation impact on corporate performance, value assessment, and investment and financing behavior, this study turns to the signaling game model and the dynamic system model, analyzing the integrative mechanism of the governance mechanism (relationship trading) and the governance mechanism of internal control rules, and examining the impact of the interaction of the two different governance mechanisms on corporate reputation mechanism. Empirical results show that the increase of supplier/customer relationship trading has a significantly negative effect on corporate reputation mechanism. Further introduction of internal control mechanism has found that the improvement of internal control effectiveness has a certain inhibiting effect on the destruction of corporate reputation by relationship trading and will enhance corporate social image. The study shows that the maintenance of corporate reputation should focus on not only the reasonable choice of business trading mode, but also the optimization of internal risk management and the improvement of control environment.
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