Internal control management for SMEs from the perspective of corporate governance and impact on financial results, commercial sector

Abstract

Introduction. The problems that concern commercial SMEs are internal operations, organization, business model, internal control, and employee incentives. Objective. To analyze the management of internal control based on the application of corporate governance and its impact on the financial results of companies in the commercial sector of Cotopaxi. Methodology. The empirical analysis was conducted in a sample of eighteen companies, where the corporate governance measures were analyzed under the methodology of the International Finance Corporation (IFC), the measures of financial results were approximated by the return on assets (ROA) and return on equity (ROE). The Granger causality approach was employed to determine the correlation of variables and finally, the deductive method was used to draw a conclusion about the internal control management model. Results. A significant one-way causality relationship was found between the internal control and ownership sub-indicators with the financial performance measures Conclusion. The importance of establishing an internal control management model as a mechanism to influence better performance of commercial SMEs is highlighted.