Nexus Among Internal Audit Quality, Corporate Governance and Performance of Selected Banks in Africa

Abstract

Using a quantitative data set of 213 banks selected from 11 African nations between 2015 and 2020 and ordered probit regression techniques, this study examines the relationship between internal audit quality, corporate governance, and the performance of banks in Africa. The study finds that corporate governance mechanisms (such as board size, board expertise, and corporate governance disclosures), and internal audit quality measures (such as audit experience and internal audit presence) are the critical drivers of bank’s performance in Africa. Findings imply that banks with board members experts in accounting and auditing with the support of experienced professional internal auditors and disclosed corporate governance mechanisms reduce the chances of bankruptcy. The study is one of the few studies that provide insights into internal audit quality and corporate governance mechanisms on the performance of banks in Africa, implying that the findings do not only add to the literature but also to policy and practice. Other implications for theory, regulators, shareholders, policymakers, management, global advocacy agencies, investors and other stakeholders are presented.