Abstract
With the application of the agency theory and institutional theory, this study is intended towards the measurement of sustainable corporate governance (SCG) impact on internal audit function (IA) within Omani public listed companies. This study will also theoretically consider the Chinese investment in Oman and its potential impact on Oman’s corporate governance. For this study, SCG is an independent variable and IA is the dependent variable. This study used a descriptive cross-sectional survey design. Data is collected by an internet-based tool and analyzed via PLS-SEM and SPSS. Result suggests that SCG has a significant and direct relationship with IA. In order to attract and sustain Chinese investment and to achieve SCG, this study can assist regulators, professional bodies, and organizations in amending their codes of corporate governance and organizational policies by introducing SCG clauses into their policies and codes with emphasis on the protection of foreign investors. To the best of the knowledge of the researcher, this study is unique, as previous studies demonstrate the IA on SCG, whereas this study emphasizes that SCG can impact the control functions within organizations that also include IA.
Highlights
In the current business environment sustainable corporate governance (SCG) is necessary to provide positive environmental, social, and economic developments (Krechovska and Prochazkova 2014)
SCG can only be achieved once the organizations have strong internal controls and compliance functions (Lombardi et al 2019; Crifo et al 2019) and internal audit function (IA) with its capability and competence is best suited towards enhancing controls and implementing total compliance (Mock et al 2017; Yee et al 2008)
SCG can be defined as a system which can contribute to the achievement of a wellfunctioning board of directors (BOD), effective audit and risk committee (ARC), beneficial nomination and remuneration committee (NRC), and considerate executive management (EM) (Lombardi et al 2019; Crifo et al 2019)
Summary
In the current business environment sustainable corporate governance (SCG) is necessary to provide positive environmental, social, and economic developments (Krechovska and Prochazkova 2014). The SCG and internal audit function (IA) are the two main pillars necessary towards effective business sustainability and business growth. SCG can be defined as a system which can contribute to the achievement of a wellfunctioning board of directors (BOD), effective audit and risk committee (ARC), beneficial nomination and remuneration committee (NRC), and considerate executive management (EM) (Lombardi et al 2019; Crifo et al 2019). BOD, ARC, NRC, and EC are described as the main constituents of corporate governance (Rehman and Hashim 2020; IFAC 2016), and are required to approve and implements policies which eventually lead towards achievement of SCG.
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