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Corporate Governance, Internal Control and Logistics Enterprise Performance: Based on the Empirical Study
of Listed Logistics Enterprises in China

Corporate Governance, Internal Control and Logistics Enterprise
Performance: Based on the Empirical Study of Listed Logistics
Enterprises in China

Li-Li Cao, School of Business Administration, Zhongnan University of Economics and Law
Jin-Bo Deng, School of Business Administration, Zhongnan University of Economics and Law
Li Liu, School of Business Administration, Zhongnan University of Economics and Law

1. Purpose/Objective

This paper empirically tests the listed logistics companies in China to study the

impact of corporate governance and internal control on the financial performance of these
companies, and proposes a new perspective for the companies intending to improve their
financial performance.
Recently, many Chinese logistics enterprises face the challenges of high costs and
yet low profits. To increase profits, most companies focus on taking cost-saving actions,

such as streamlining the transportation, distribution, and warehousing systems. However,
the traditional cost reduction efforts are reaching their limits, and the incremental benefits
gradually become small. Therefore, implementing new systems or approaches is necessary

for the companies aiming to improve corporate performance.
Theoretically, with the rise of separation of ownership from control, the owners
of enterprises need to make efforts to supervise the professional managers’ behaviors
to mitigate the agency costs. In this context, corporate governance and internal control
mechanisms are regarded as effective countermeasures to restrain the powers of

executives; however, in practice, although the complete accounting audit system and
information disclosure control processes, including corporate governance and internal
control, have been established for publicly listed companies in China, the financial frauds

are still frequent, such as the cases of Kangmei Pharmaceutical in 2019 and Luckin Coffee
in 2020. These financial statement fraud cases raise the general public’s concerns about the
quality of the corporate governance and internal control of the listed companies, and also
the questions about how well to manage them.

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