Management Control System, Internal Control System, and Organizational Performance in Private Hospitals

This research examines the effects of management control systems (MCS) and internal controls on the private hospital performance, considering the roles of earnings management, innovation, and transformational leadership. The proposed model was tested with survey data from 333 managers and financial experts. The results indicated that private hospital MCS and internal controls positively impact performance, real earnings management (REM), accrual earnings management (AEM), and innovation intensity. Additionally, AEM positively affects the performance, whereas REM and the intensity of innovation do not have such an effect. However, neither of them serves as a mediating role in the relationship between internal controls and hospital performance. Furthermore, transformational leadership does not moderate the relationship between internal controls and hospitals performance. The findings highlight the utility of adopting, designing, and implementing active MCS and internal controls in private hospitals to enhance operational efficiency, effectiveness, and competitive advantage.