Impact of internal control quality on the information content of social responsibility reports: A study based on text similarity—Evidence from China

Abstract

To date, the impact of internal control on text information social responsibility reports has been rarely explored. This study investigates the correlation between internal control and information content of social responsibility reports based on the similarity of text information of reports by listed enterprises in 2006–2017. Overall, high-quality internal control results in low text similarity of social responsibility and high information content of social responsibility reports. The internal control quality could enhance the information content of social responsibility reports by decreasing the enterprise’s agency costs. For large-scale corporations, non-state enterprises and those with intensive public attention, effective internal control can enhance the information content of social responsibility reports. The agency cost can exert a partial mediating effect for large-scale corporations and enterprises with intensive public attention and complete mediating effect for non-state enterprises. Moreover, this study extends the scope of internal control to the quantitative dimension of text information and has crucial implications for listed enterprises, investors, and governments regarding internal control and disclosure of social responsibility information.