EXPLORING THE EFFECT OF BUSINESS PERFORMANCE ON SMALL AND MICRO ENTERPRISES TO ESTABLISH AN INTERNAL CONTROL COMMITTEE: A BINARY LOGISTIC REGRESSION MODEL

Abstract

This study examines how business performance affects small and micro enterprises’ decision on establishing an internal control committee. By observing a sample of 186 small and micro firms in Turkey, we test the claim that small and micro enterprises’ financial problems obstruct establishing an internal control committee. We measure business performance by financial and non-financial indicators obtained from sample firms’ accounting reports and information system. Then, the effect of business performance on establishing an internal control committee is studied by a binary logistic regression analysis. As a result of the analysis it is explored that there was a statistically significant positive effect of business performance on “establishing an internal control committee” decision and the claim that financial problems obstruct establishing an internal control committee is verified.