Sustainable Practices and Performance of Resource-Based Companies: The Role of Internal Control

Abstract

As the concept of sustainable resource usage gains popularity, resource-based companies are faced with the challenge of reconciling environmental responsibility with corporate performance to achieve the “coexistence” of environmental and economic benefits. We take data related to RBCs for 2010–2020 and perform a multiple regression analysis of the data. This study focuses on the role of internal control in analyzing the impact of resource-based companies (RBCs) on corporate financial performance (CFP) while assuming corporate environmental responsibility (CER). The findings reveal that the fulfillment of CER by RBCs positively impacts CFP. We then add a moderating test to observe the role of internal controls in the relationship between the two. The results show that the positive effect of CER on CFP is greater with stronger internal control measures. In addition, we introduce heterogeneity analysis to analyze the effect of firm ownership. The moderating effect is diminished in privately owned companies. This research provides empirical evidence for the moderating effect of internal control on the connection between CER and CFP while also considering the influence of ownership.