Abstract: This paper analyzes the relationship between digital transformation and the quality of internal control based on data from Shanghai and Shenzhen A-share listed enterprises from 2007 to 2022, deeply exploring the mechanism under the perspective of goal alignment. It is found that digital transformation significantly enhances the quality of internal control, and when the level of strategic aggressiveness is low, internal control costs are low, and the level of information disclosure is low, digital transformation and internal control are more aligned in their objectives, resulting in a more pronounced synergistic effect between the two. Further research reveals: (1) The impact of digital transformation on internal control quality is more pronounced in state-owned enterprises and non-high-tech enterprises; (2) When industry concentration is low, industry profitability is high, and the local intellectual property protection and legal governance are inadequate, digital transformation has a more pronounced effect on improving the quality of internal control; (3) Different metrics and dimensions of digital transformation, as well as management’s emphasis on digital initiatives, have varying effects on internal control quality; (4) Digital transformation has a heterogeneous impact on the quality of different elements of internal control. This paper provides empirical evidence for understanding the causal relationship between digital transformation and internal control quality, its mechanisms and constraints.

Key words: enterprises’ digital transformation, internal control quality, goal alignment, action mechanism