Corporate Governance Process Research Articles

Mapping the literature of internal auditing in Europe: a systematic review and agenda for future research

Purpose Although many firms are investing considerable resources in building and designing strong and effective internal auditing (IA) to improve corporate governance and internal control processes, IA literature is still relatively fragmented. Therefore, this paper aims to provide a systematic review of studies on IA in 27 European countries and the UK. Design/methodology/approach Based on the Scopus database, 142 papers published between 1987 and 2022 were analyzed. This study focused on evaluating and analyzing the characteristics of literature and the themes investigated with a focus on four key aspects: governance, the effectiveness of IA, the relationship between internal auditors and other parties and risk management to provide directions for future research. Findings This study found that IA literature did not provide the integrated knowledge of internal audit functions (IAFs) and the factors that could contribute to their implementation as required. The results showed that the UK, Greece and Italy dominate the published literature in terms of the number of studies. There are a few studies that investigate IA in private institutions and nonprofit organizations. Interestingly, a vast majority of studies are not based on theoretical grounds. The results also showed that there is an absence of studies that discuss the impact of cultural and political systems as well as the demographic characteristics of auditors on the implementation of IAFs. Originality/value This study is useful for researchers, organizations and regulators because it contributes to the literature by highlighting the intellectual development of IA in the European countries and the UK, providing several directions for future studies. To the best of the authors’ knowledge, this research is the first study to use a systematic review approach in evaluating the intellectual development of IA research in European countries, identifying areas and elements that received less attention in previous studies and providing a roadmap for future studies.

Russian practice of corporate governance regulation in different types of joint-stock companies

The article examines issues of joint-stock companies corporate governance regulation in Russia. The country has a system of norms on various aspects of corporate governance (laws and regulations, internal documents, written recommendations). Law enforcement and business practice are of great importance. Subjects that own the corresponding blocks of shares have a significant influence. Corporate governance in private organizations is generally less regimented than in state ones. Differences exist in federal and regional joint-stock companies. Authorities independently build corporate governance regulation systems there. In general, Russia has a fairly large number of norms in the designated area, but some of them complicate process of corporate governance. It doesn’t always lead to a desired result.

What Drives Compliance with Corporate Governance Principles: Inference from Public Institutions in Nigeria

This study assessed the compliance of public institutions with corporate governance processes in Nigeria. The survey research design was employed in the study. Primary data was collected through the administration of a semi-structured questionnaire to the Finance and Accounts, Internal Audit and senior level management staff. The main instrument for the collection was a structured questionnaire which was subjected to validity and reliability test. Data analysis involves the use of descriptive and inferential statistics. Findings from the study revealed that one third (33.33%) approved politics had great effect on corporate governance. While two in five (41.67%) stated it had moderate effect. Very negligible number (2%) believed politics didn’t have any effect in their organizational setting. Community related factors were also considered as one of the major drivers of corporate governance. One in five (22%) believed community factor like traditional institution had great effect on corporate governance in their organization. This is followed by the onethird (33.33%) who admitted it had a moderate effect. Also, majority (45%) agreed religion and cultural factor moderately influenced corporate governance. While three in ten confirmed it only had a low effect. In relation to constitutional factors, well above average and majority (55%) stated it had moderate effect on corporate governance. It shows that qualification of accountants and internal auditors had great effect on corporate governance with the majority (87%) confirming this. Similarly, the level of exposure or experience of accountant and internal auditors was said to be of great impact by the majority (77%) of the respondents. While the same goes for the effect that qualification of other management staff had on organizatonal corporate governance where majority (45%) claimed it had a great effect. The study concludes that the current compliance of public institutions with corporate governance processes in Nigeria should be sustained for enhance financial service delivery in Nigeria public organizations

Climate change disclosures by public sector organisations

Global warming and increasingly volatile weather patterns, arguably caused by anthropogenic climate change, is one of the defining challenges facing the world today. It is therefore imperative that organisations proactively respond by not only disclosing the impact of climate change on their operations, but also by describing their initiatives to combat climate change. Against this backdrop, and since public sector organisations utilise public funds, we argue that public sector organisations should not only account to the public about their stewardship of public resources, but are also obliged to explain how they are safeguarding the public by acknowledging and combatting climate change. Our study therefore explores the disclosure of climate related activities from a purposively selected sample of government departments and organisations in South Africa, a country that has been lauded for the quality of corporate governance processes. We developed a climate change disclosure quality (CCDQ) index to assess the climate change disclosures of these public sector organisations. The CCDQ index applied to the most recent publicly available annual/integrated reports of the selected public sector organisations, took six key disclosure elements into account. While our results reveal that the majority of public sector organisations disclose climate related issues, not all do. Moreover, the extent and scope of these disclosures vary significantly. We accordingly recommend that a framework, utilising the disclosure elements described in this paper, be developed which could be applicable to both private and public sector organisations.

Corporate governance

Corporate governance is a centuries-old concept, but it has gained significant impetus in India during the last two decades. This article examines the corporate governance practises of Bangalore's top ten information technology firms. We discover that all information technology companies adopt some form of corporate governance, at the very least as stated in their annual reports to comply with regulatory obligations. We discover that corporate governance policies have a significant impact on a company's performance. We observe that the corporations have no immediate intentions to significantly alter their corporate governance processes.

Models of information business processes of corporate governance

Models of information business processes of corporate governance

Auditing Profession in Peril: Strategic Quality Assurance Measures as the Way Forward in Nigeria

Corporate collapses, business failures and fraudulent financial reporting scandals have led to a very turbulent time, resulting in a credibility crisis for the auditing profession as a whole. There is an increasing demand on auditors by regulators, third parties, and users of their services in terms of their responsibilities and duties to perform. Using the secondary data research approach, this paper examines the reasons why auditing is proving risky and expensive. It finds out that audits have evolved from routine checklists to a vital part of the corporate governance process of companies and that the auditing profession must be actively dynamic and proactive in order to surmount modern day challenges which have drastically impacted the profession. It concludes that unless the profession, the regulators, and users of the services of auditors come together to review the profession, it might be difficult to source value adding auditors in the future. It recommends, amongst others, that versatile multi-disciplinary knowledge, training, experience, continuous learning process, and urgent engagement of experts in Information and Communications Technology, Fraud, Forensic Accounting, and Statistics, will all be needed for success.

Correlation between distribution of cash dividends from capital reserves, ultimate controlling shareholders and corporate governance

PurposeThis study aims to discuss whether a new accounting policy can help enterprises withstand operating risks and whether corporate governance can play a supervisory role. Taiwan took the lead worldwide in allowing companies to distribute cash dividends from capital reserves. Compared with traditional cash dividends distributed from retained earnings, this move was aimed at maintaining the stability of cash dividends and helping listed companies address the risks of temporary downturns. However, the distribution of cash dividends from capital reserves may violate the principle of capital maintenance and damage creditors’ equity. The authors sought to examine whether corporate governance could play a supervisory role.Design/methodology/approachThe present study targeted Taiwanese listed companies and cited data from the Taiwan Economic Journal. The study period was from 2011–2019. The authors tested the hypotheses using the least square method.FindingsThe results showed that ultimate controlling shareholders of listed companies can maximize their own interests through ownership arrangements, whereas corporate governance cannot play a supervisory role nor protect creditors’ equity. The findings provide insight on whether, in the development process of corporate governance, appropriate measures are taken to protect creditors’ equity in addition to shareholders’ equity, or achieve a good coordination of interests among all stakeholders.Originality/valueThe ultimate controlling shareholders or directors of a listed company would seek to maximize their own interests, and transfer the operating risks to creditors through the arrangement of dividend policy, thus harming creditors’ equity. However, independent directors cannot play a supervisory role. The authors inferred that corporate governance standards previously focused on the shareholder level or alleviation of the agency problem between controlling shareholders and non-controlling shareholders but ignored creditors’ equity.

The role of internal audit activity in acquiring external audit services: An empirical study of banks

The role of internal auditing has received significant attention from researchers in the recent past. Due to its enormous contribution to the banking system, it has been used extensively to support other governance processes. The objective of this research paper is to explore how internal audit activity plays a role in the acquisition of external audit services in the national banks of the United Arab Emirates (UAE). Internal audit activity and external audit services represent a dynamic process of the corporate governance process. The study uses both qualitative and quantitative data to determine the role that internal auditing plays in the acquisition of external audits. The data is collected from 27 national banks in the UAE using questionnaires, hence it gives the opinions that people have about auditing as well as the figures of respondents. The study aimed to understand how the functions of internal audits contribute to the acquisition of external audits. The main contribution of this study is supporting the arguments that auditing researchers have not been fully responsive to the issues associated with changes in internal audit, services that may be offered, and internal audit’s growing function (Hayek, 2013)

Transparancy and Accountability Contribution Toward Sustainability of Banking Sector in Indonesia

ABSTRACT- The board of directors, administrators, and top management personnel all play a role in establishing strategies, setting goals, and assigning duties to implementers. One of the primary goals of corporate governance is to increase shareholder value. On this basis, it can be argued that corporate governance is a critical component of any business's long-term viability. The goal of the study was to see how transparency and accountability affected the banking sector's long-term viability. The study was guided by three theories: agency theory, stewardship theory, and stakeholder’s theory, all of which provide important information on corporate governance processes and how different stakeholders' interests are addressed. This study employs a quantitative research methodology. It is used to quantify a problem in quantitative research by generating numerical data or data that can be turned into useable statistics. Transparency, accountability, justice, and responsibility, according to the study, all have a substantial impact on the banking industry's long-term viability. The study suggests that transparency and accountability have a favorable and considerable impact on the banking industry's long-term viability. The result suggesting that all Indonesian banks' management should strictly enforce openness in all operations and activities conducted by workers in order to achieve sustainability.

Emerging Prospects of Shareholder Engagement in India

The need for strengthening engagement between companies and its shareholders is being increasingly recognised over the past few years. Various authors have discussed about the role of shareholder engagement in enhancing corporate governance standards. The literatures discussing these aspects are focusing on developed countries. This study seeks to make a contribution to the debate by discussing the scope and challenges for shareholder engagement in India. Many reforms were introduced to enhance shareholder participation and engagement in India. The study explains the significance of shareholder engagement and the strategies adopted by shareholders to influence corporate policy. The study gives a brief overview of scheme of division of power between board of directors and the company in general meeting in India. It examines the statutory reforms introduced in India for promoting shareholder engagement in corporate governance processes. It also discusses some incidents in Indian corporate sector to examine the growth of shareholder engagement in India.

The Influence of Ownership Concentration on Firm Financial Decisions and Value: Evidence from Nairobi Securities Exchange

This study paper examines the influence of ownership concentration and firm financial decisions on firm value for firms listed on the Nairobi securities exchange. This study is supported by theoretical literature under the signaling hypothesis, institutional monitoring hypothesis, and agency theory. The study used longitudinal data for listed firms during the ten years (2008- 2017) and regression analysis was used to study the nature and extent of the relationship. The target population was sixty-eight firms that traded equity securities during the period. Empirical results reveal that ownership concentration has no significant positive effect on firm value, but dividend payment significantly influences firm value, and the capital structure only compliments other corporate governance processes in a firm. Firms listed on the Nairobi Securities Exchange have a high level of ownership concentration and this suggests, contrary to the shareholder monitoring hypothesis, large shareholders could be entrenched and, unless other complementary corporate mechanisms are present, large shareholders may not act in the best interest of minority shareholders.The youthful spirit of students to become entrepreneurs is apparent to the naked eye. However, the general objective of this research was to analyze the entrepreneurial attitude of male students from the Tecnológico Nacional de México campus, Tepeaca. One hundred and seventy-two male students were surveyed. The questionnaire was designed and validated by experts in the area. The validation was carried out by a new method; This consists of applying a Pearson factorial analysis for linear correlations and chi-square for nonlinear associations. Five postulates are applied to debug and validate each item. The items are taken as factors or independent variables to contrast the working hypotheses. The sampling was random. The results matrix obtained after applying Pearson's correlation yielded three correlations above 0.7. With these correlations, six linear hypotheses were validated. Only eight chi-squarevalidated nonlinear hypotheses were selected due to the limited space of a scientific article. In general, 400 working hypotheses were designed in the order of 20 items taken in two to two. It is concluded that the surveyed students have extensive knowledge of entrepreneurship. They are prepared for innovation, creation, and success in the companies they own and the companies where they provide their services.

The practices of Shariah governance systems of Islamic banks in Bangladesh

PurposeThe purpose of this study is to explore the practices of Shariah governance (SG) systems in terms of their guidelines, current operational procedures, internbal policies and structures and regulatory framework of Islamic banks in Bangladesh from the viewpoints of Shariah, Tawhidic approach/ontological approach and Shuratic process of Islamic corporate governance and institutional theory.Design/methodology/approachA semi-structured interview tactic has been applied to attain the objective. Overall, data has been collected from the regulators, Shariah supervisory board members, Shariah department executives and experts from the central bank and Islamic banks of Bangladesh.FindingsThe study finds that Islamic banks do not follow complete Shariah principles in all aspects of SG nor violate them fully in their overall functions due to less accountability, which contradicts the concept of the Tawhidi epistemological process of Islamic corporate governance. Islamic banks announce that they are following Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) guidelines, but in practice, they do not follow the instructions accurately because all of the standards and policies of AAOIFI and the Islamic Financial Services Board are not applicable in Bangladesh due to its cultural, legal and regulatory structures. It is found that Islamic banks in Bangladesh have a lower practice of maqasid as-Shariah and Tawhidic approach and Shuratic process.Research limitations/implicationsThe study significantly contributed to the central bank of Bangladesh and Islamic banks by exploring the SG systems for their further enhancement. The research provides some suggestions for improving existing SG systems and enhancing more application of SG guidelines and Shariah principles in the overall operations of the Islamic banks in Bangladesh.Originality/valueThis research extends the literature regarding the Islamic banks’ SG practices in Bangladesh. The study also contributes to Shariah, Tawhidic approach/ontological approach and Shuratic process of Islamic corporate governance and institutional theory by exploring the Islamic banks’ existing SG practices in Bangladesh.

Legal Protection of Minority Shareholders under Corporate Governance Process

In recent days, most of the corporate are failing in managing business effectively and the major cause for this is conflicts between majority and minority shareholders of the company which lead to direct or indirect destruction of business at the end. Even though, there are certain laws and provisions made for the sake of minority shareholders, those are enforced well and needs to make them as utmost safeguards to minority shareholders. In this paper, we will discuss the issues for conflict including rights of minority shareholders as well as roles and responsibilities of shareholders by analyzing possible solution for conflicts between majority and minority shareholder.

Formation of management reporting in the enterprise controlling system

Management reporting is an important element of both corporate governance and internal processes that are carried out in the enterprise’s controlling system. The primary purpose of management reporting is to provide information support for management decisions, which includes financial planning, financial reporting, financial analysis, management accounting, budgeting, controlling, and management reporting. Obstacles to the implementation of an effective financial reporting management system are the lack of formalized rules for the formation, submission, preparation, correction, and control of management reports. In order to overcome this shortcoming, the article introduces the term «life cycle of a management report», which is understood as a period of time that includes the development, implementation, and use of a management report until it meets user information requests. At the same time, the following stages of the management report life cycle are proposed: identifying a request from the user; identifying responsible persons and the working group participants for developing the report form; identifying reporting objects that correspond to the user’s request; defining accounting and analytical sources of information; finding out the degree of aggregation of indicators; automating data submission for updating reports; visualizing the reporting form, testing the form; identifying necessary corrections; formulating recommendations for decision-making guidance; identifying new requests. This approach will help to solve the key problem of information support for the management decision-making process, namely, the lack of coordination between user information requests and the availability of information sources to ensure them.

Corporate governance paradigms of hazardous industries: Enduring challenges of Britain’s civil nuclear industry

This article discusses risk management processes in Britain’s civil nuclear industry from a corporate governance perspective. As an example of a hazardous industry that can inflict catastrophic environmental damage and fatalities, effective governance of Britain’s nuclear industry is a critical issue. Yet the industry’s history of corporate governance suggests that processes of corporate governance have regularly failed to meet core requirements of its stakeholders. A core requirement is for governance designs that recognize the interests of public owner–stakeholders. In meeting this requirement, the article offers a framework for a relationship-driven form of corporate governance that enables meaningful stakeholder engagement in decision-making.

Understanding CSR and sustainability integration patterns into the corporate governance and organisational processes of a ship management company: a case study

In recent years there has been a growing use of corporate social responsibility and sustainable development concepts, both as international policy frameworks and as self-regulating business models. The International Maritime Organisation, guided by its recent commitment to contribute to the United Nations Sustainable Development Goals, has acknowledged and encouraged the engagement of these principles to the shipping industry. However, the literature review showed some limited research to their practical application and understanding at the ship management level. Through an adopted case study strategy and applied content analysis method, this paper explores how CSR and sustainable development are integrated and diffused into the corporate governance structure and organisational processes of a shipping company. The results underscore the extensive handling of aspects of CSR and sustainable development throughout company's strategy and organisational processes. However, company issues falling within fair operating practices and areas of community involvement do appear to be lagging behind.

Understanding CSR and sustainability integration patterns into the corporate governance and organisational processes of a ship management company: a case study

In recent years there has been a growing use of corporate social responsibility and sustainable development concepts, both as international policy frameworks and as self-regulating business models....

Value-added Internal Audit from the Perspective of Corporate Governance

In an increasingly competitive market, internal audit, an integral part of corporate governance, has become increasingly important. Traditional internal auditing no longer fully responds to the current complex scope of internal auditing and the governance objectives of adding value to companies. With the continuous strengthening of corporate governance by modern enterprises, the goal of internal audit is gradually consistent with that of corporate governance: to increase the overall value of the company. This makes internal audit function, audit content and audit scope change accordingly, and value-added internal audit emerges as the times require. With the continuous development of international economic globalization, value-added internal audit is the inevitable trend of internal audit transformation from the perspective of corporate governance. Modern internal audit plays a very important role in improving the governance structure and internal control, and can bring value added to enterprises. The functions and responsibilities of internal audit are positioned to promote the achievement of corporate governance objectives, with increasing emphasis on improving governance and adding value. This means that the functional scope of internal audit has changed from simple financial audit at the beginning to a series of activities such as review and evaluation, control and risk management that run through all aspects of corporate governance. Internal audit is not only a part of corporate governance, but also evaluates and improves the effectiveness of corporate governance procedures. The benign interaction of the two contributes to the improvement of the management procedure and the increase of the overall value of the company. Internal audit can make use of its unique independence to control the risk of the company, improve the efficiency of corporate governance and improve the process of corporate governance by performing a comprehensive evaluation function, so as to enhance the comprehensive quality and economic benefits of the company and realize the overall value of the company.

Compliance

O termo Compliance está cada vez mais evidente nas organizações como forma de cumprimento das normas relacionadas às suas atividades, interligado ao programa de integridade para fins de fortalecer os processos de governança corporativa e a sustentabilidade dos negócios. Esta pesquisa foi desenvolvida através de revisão bibliográfica com abordagem qualitativa, em uma operadora de plano de saúde do nordeste brasileiro. Para aprimorar sua gestão através da implementação do Compliance e ampliar os relacionamentos norteados pela ética e integridade, a operadora deve atender ao ambiente regulatório, prevenir e coibir a ocorrência de condutas ilícitas, incentivando a detecção e mitigação de seus riscos. O trabalho aborda propostas de soluções em que se optou pela execução das atividades por comissão específica multidisciplinar, estruturadas em nove pilares do programa de integridade. Por meio de técnicas de observação, através de checklist, identificou-se que operadora necessita gerir seus principais riscos e fortalecer seus controles internos, formalizando suas diretrizes por meio de políticas e realizando treinamentos constantes para garantir a efetividade de seu programa de integridade e consequentemente atender todos os requisitos da Resolução Normativa n°443/2019 da agência nacional de saúde suplementar (ANS).