The role of financing constraints and environmental uncertainty in limiting the link between operational diversification and the weakness of internal controls

The purpose of this paper is to examine the role of financing constraints and environmental uncertainty in limiting the relationship between operational diversification and weak internal controls. For this purpose, data on 120 stock companies for the period 2007-2017 were extracted and logistic regression was used to test the hypothesis. According to the first hypothesis, product diversification has a significant relationship with weak internal controls. In addition, environmental uncertainty has a significant impact on the relationship between diversification and weak internal controls. Finally, financing constraints do not have a significant effect on the relationship between diversification and weak internal controls.