Internal-Control Willingness and Managerial Overconfidence

Internal control is a branch of accounting subject, and accounting control and risk management are the core of enterprise internal control. Previous studies have shown that high-quality internal control inhibits or regulates managerial overconfidence (MOC). However, it is believed that the influenti...

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Autores principales: Bin Liu, Lin Li
Formato: article
Lenguaje:EN
Publicado: Frontiers Media S.A. 2021
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Acceso en línea:https://doaj.org/article/e67b7fa5731648439f0bbd224921a991
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spelling oai:doaj.org-article:e67b7fa5731648439f0bbd224921a9912021-12-01T14:55:11ZInternal-Control Willingness and Managerial Overconfidence1664-107810.3389/fpsyg.2021.724575https://doaj.org/article/e67b7fa5731648439f0bbd224921a9912021-11-01T00:00:00Zhttps://www.frontiersin.org/articles/10.3389/fpsyg.2021.724575/fullhttps://doaj.org/toc/1664-1078Internal control is a branch of accounting subject, and accounting control and risk management are the core of enterprise internal control. Previous studies have shown that high-quality internal control inhibits or regulates managerial overconfidence (MOC). However, it is believed that the influential factors of internal-control quality (ICQ) are normally objective factors, such as corporate characteristics, financial status, and governance structure. Corresponding to another type of constituent element, that is, the subjective factor, which we called internal-control willingness, has not been explored. In this study, we defined internal-control willingness as the degrees of the subjective initiative of the internal-control construction and execution activities of enterprises. In addition, we proposed a method to measure internal-control willingness based on text analysis and principal component analysis using Python, and then, we tested its impact on ICQ and MOC. Our findings are as follows: (A) internal-control willingness has a positive impact on ICQ, and (B) internal-control willingness lowers MOC. Our study introduces subjective initiative factors into the field of internal control and also extends the understanding of internal-control theory. Based on empirical conclusions, we suggested that regulatory authorities and corporate boards improve incentive mechanisms to jointly strengthen the internal-control willingness of all employees, so as to help enterprise managers operate rationally.Bin LiuLin LiFrontiers Media S.A.articlewillingnessmanagerial overconfidenceinternal-control qualityinternal-control willingnessinternal controlPsychologyBF1-990ENFrontiers in Psychology, Vol 12 (2021)
institution DOAJ
collection DOAJ
language EN
topic willingness
managerial overconfidence
internal-control quality
internal-control willingness
internal control
Psychology
BF1-990
spellingShingle willingness
managerial overconfidence
internal-control quality
internal-control willingness
internal control
Psychology
BF1-990
Bin Liu
Lin Li
Internal-Control Willingness and Managerial Overconfidence
description Internal control is a branch of accounting subject, and accounting control and risk management are the core of enterprise internal control. Previous studies have shown that high-quality internal control inhibits or regulates managerial overconfidence (MOC). However, it is believed that the influential factors of internal-control quality (ICQ) are normally objective factors, such as corporate characteristics, financial status, and governance structure. Corresponding to another type of constituent element, that is, the subjective factor, which we called internal-control willingness, has not been explored. In this study, we defined internal-control willingness as the degrees of the subjective initiative of the internal-control construction and execution activities of enterprises. In addition, we proposed a method to measure internal-control willingness based on text analysis and principal component analysis using Python, and then, we tested its impact on ICQ and MOC. Our findings are as follows: (A) internal-control willingness has a positive impact on ICQ, and (B) internal-control willingness lowers MOC. Our study introduces subjective initiative factors into the field of internal control and also extends the understanding of internal-control theory. Based on empirical conclusions, we suggested that regulatory authorities and corporate boards improve incentive mechanisms to jointly strengthen the internal-control willingness of all employees, so as to help enterprise managers operate rationally.
format article
author Bin Liu
Lin Li
author_facet Bin Liu
Lin Li
author_sort Bin Liu
title Internal-Control Willingness and Managerial Overconfidence
title_short Internal-Control Willingness and Managerial Overconfidence
title_full Internal-Control Willingness and Managerial Overconfidence
title_fullStr Internal-Control Willingness and Managerial Overconfidence
title_full_unstemmed Internal-Control Willingness and Managerial Overconfidence
title_sort internal-control willingness and managerial overconfidence
publisher Frontiers Media S.A.
publishDate 2021
url https://doaj.org/article/e67b7fa5731648439f0bbd224921a991
work_keys_str_mv AT binliu internalcontrolwillingnessandmanagerialoverconfidence
AT linli internalcontrolwillingnessandmanagerialoverconfidence
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