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Article
Publication date: 30 May 2023

Mahdi Salehi, Raha Rajaeei, Ehsan Khansalar and Samane Edalati Shakib

This paper aims to determine whether there is a relationship between intellectual capital and social capital and internal control weaknesses and assess the relationship between…

Abstract

Purpose

This paper aims to determine whether there is a relationship between intellectual capital and social capital and internal control weaknesses and assess the relationship between the variables of intellectual capital and social capital and internal control weaknesses.

Design/methodology/approach

The statistical population consists of 1,309 firm-year observations from 2014 to 2020. The research hypothesis is tested using statistical methods, including multivariate, least-squares and fixed-effects regression.

Findings

The results demonstrate a negative and significant relationship between intellectual capital, social capital and internal control weaknesses. The study also finds that increased intellectual and social capital quality improves human resource utilization, control mechanism, creativity and firm performance. The results also show that intellectual capital and social capital enhancement will reduce internal control weaknesses in the upcoming years.

Originality/value

This paper is the pioneer study on the relationship between intellectual capital and social capital and internal control weaknesses in Iran, carried out separately and in exploratory factor analysis. This paper considers intellectual capital components for theoretical factor analysis, including human capital, structural capital and customer capital. Internal control weakness is assessed based on financial, non-financial and information technology (IT) weaknesses.

Details

Journal of Islamic Accounting and Business Research, vol. 15 no. 5
Type: Research Article
ISSN: 1759-0817

Keywords

Open Access
Article
Publication date: 27 November 2023

Gianluca Ginesti, Rosalinda Santonastaso and Riccardo Macchioni

This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.

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Abstract

Purpose

This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.

Design/methodology/approach

Leveraging a hand-collected data set of listed family firms from 2014 to 2020, this study uses regression analyses to investigate the impact of family ownership, family involvement on the board, family CEO and the generational stage of the family business on the quality of internal auditing.

Findings

The results provide evidence that family ownership is positively associated with the quality of internal auditing, while later generational stages of family businesses have the opposite effect. Additional analyses reveal that the presence of a sustainability board sub-committee moderates the relationship between generational stages of family businesses and the quality of internal auditing function.

Research limitations/implications

This paper does not consider country-institutional factors and other potentially family-related antecedents or governance factors that may affect the quality of internal auditing.

Practical implications

The results are informative for investors and non-family stakeholders interested in understanding under which conditions family-related factors influence the quality of internal auditing functions.

Originality/value

This study offers fresh evidence regarding the relationship between family-related factors and the quality of internal auditing and board sub-committees that moderate such a relationship in family businesses.

Details

Corporate Governance: The International Journal of Business in Society, vol. 24 no. 8
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 10 September 2024

Arash Arianpoor, Milad Valirouh and Cumhur Sahin

The present study aims to investigate the impact of internal control effectiveness on supply chain management efficiency (SCME) and capital allocation efficiency for companies…

Abstract

Purpose

The present study aims to investigate the impact of internal control effectiveness on supply chain management efficiency (SCME) and capital allocation efficiency for companies listed in the Tehran Stock Exchange (TSE). In addition, it investigates the mediating role of supply chain management efficiency in the relationship between internal controls and capital allocation efficiency.

Design/methodology/approach

The data about 191 companies in 2014–2022 were examined. The sales per inventory ratio was used to calculate SCME. The present study also applied the Generalized Method of Moments (GMM) for endogeneity concerns.

Findings

The results showed that internal control effectiveness has a significant positive effect on SCME. Moreover, internal control effectiveness and SCME significantly positively affect capital allocation efficiency. SCME has a mediating role in the relationship between internal control effectiveness and capital allocation efficiency. These findings remained robust even after several robustness tests. In addition, this study tested the results' robustness by dividing data into the pre-COVID-19 and post-COVID-19 years. The previous results were also confirmed according to the robustness test of COVID-19.

Originality/value

Challenges in the supply chain often hinder capital allocation efficiency. In addition, enterprises should try to establish strong internal controls to ensure SCME. Therefore, the relationship between internal control effectiveness, SCME and capital allocation efficiency is complex and underscores the importance of robust internal controls in optimizing resource allocation within organizations. Interestingly, this topic has not been extensively researched in accounting and business research, and there is a lack of empirical evidence on these effects. Consequently, this study aims to fill the gap and identify potential opportunities for new research directions.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 30 August 2024

Umer Sahil Maqsood, Shihao Wang and R.M. Ammar Zahid

In the context of an evolving digital-based global economy, this study aims to investige the impact of digital transformation (DT) on a firm’s internal control (IC) quality. It…

Abstract

Purpose

In the context of an evolving digital-based global economy, this study aims to investige the impact of digital transformation (DT) on a firm’s internal control (IC) quality. It also explores how the personal traits of (CEOs) – such as age, gender and educational background – intersect with DT to shape the IC quality in various types of state-owned enterprises (SOEs).

Design/methodology/approach

The study uses the data from China A-shares non-financial enterprises, listed on Shanghai and Shenzhen stock exchanges between 2007 and 2020. Using the fixed effect regression method alongside various statistical techniques, such as propensity score matching, alternative analysis and instrumental variables analysis, yields robust findings. These methods effectively address issues related to functional form misspecification and potential biases from omitted explanatory variables.

Findings

The findings reveal a positive impact of DT on firm IC quality, and this impact is more pronounced in firms when the CEO is female, young and possesses a higher level of education. Notably, the study also distinguishes between central and local state-owned enterprises (SOEs), highlighting that DT has a greater influence on IC quality in central SOEs, where CEOs often have higher political ranks and closer to government monitoring. Overall, the findings are robust and consist to alternative variable and other statistical methods.

Research limitations/implications

Following are the significant implications for both academia and business. First, firms that effectively adopt DT to enhance IC not only gain a strategic advantage over competitors but also establish efficient risk management practices and a robust IC system. Second, better IC resulting from DT can enhance investor and stakeholder confidence. This is particularly important for publicly traded companies, where investors and analysts closely scrutinize the robustness of IC systems. Third, DT could result in cost savings over time, as automation and streamlined processes may reduce the need for manual efforts and resource-intensive tasks associated with IC.

Originality/value

The findings are contributed to the literature in multiple ways. It enhances our comprehension of the intricate DT-IC quality relationship, and provides valuable insights into the transformative impact of DT on organizational operations and risk management. It also introduces a novel perspective by investigating how CEOs personal traits intersect with DT to shape IC quality, contributing to upper echelons theory. Furthermore, it expands the discussions on firm ownership by considering the types of SOEs (central vs. local), in the DT-IC quality context.

Details

Managerial Auditing Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 27 August 2024

Hui Shan, Daeyoung Ko, Lan Wang and Gang Wang

This study aims to examine the relationship between managerial ability and innovation efficiency, the mediating effect of digital transformation and the moderating effect of…

Abstract

Purpose

This study aims to examine the relationship between managerial ability and innovation efficiency, the mediating effect of digital transformation and the moderating effect of internal control.

Design/methodology/approach

This study collected A-share manufacturing listed companies in China from 2008 to 2019 and analyzed the data by means of multiple regression analysis, mediating effect test, moderating effect test and heterogeneity test. Finally, the authors conducted robustness test by remeasuring key variables and adding control variables.

Findings

The empirical results show that the higher managerial ability can improve innovation efficiency, internal control has a positive moderating effect and digital transformation plays a partial mediating effect on the relationship between managerial ability and innovation efficiency. Specially, it is found that the mediating effect of digital transformation is not significant in non-state-owned firms.

Practical implications

This study suggests that it is necessary to focus on the managerial ability in terms of both cultivation and supervision, to further deepen the digital transformation from the aspects of firms, government and society, especially to support the digital transformation of non-state-owned firms, and to make efforts to improve the corporate governance mechanism and internal control system, so as to better comprehensively realize the improvement of enterprise innovation efficiency.

Originality/value

Based on the mediating effect analysis of digital transformation and the moderating effect analysis of internal control, this study explores the role of managerial ability on innovation efficiency from a new perspective, expanding the related theoretical framework and research boundaries.

Details

Chinese Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 25 December 2023

Hamideh Asnaashari and Fatemeh Khodabandehlou

In light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of…

Abstract

Purpose

In light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of applying Lean Six Sigma (LSS) techniques on the effectiveness and efficiency of IA.

Design/methodology/approach

The study used a quantitative approach, surveying Iranian internal auditors with a sample size of 384 participants. Data analysis involved confirmatory factor analysis and structural equation modeling.

Findings

The analyses demonstrate a significant association between LSS application and IA effectiveness and efficiency. In addition, an exploratory analysis indicates that the application of LSS techniques by less experienced internal auditors had a reverse effect on IA function quality as a component of IA competency. However, IA motivation factors, including education and position, did not mediate the impact of LSS on IA effectiveness and efficiency.

Research limitations/implications

This study was conducted with Iranian internal auditors, which may limit the generalizability of the findings to other countries. However, the primary academic implication of this research lies in its novel perspective on emphasizing the concept of continuous improvement in IA through the use of LSS techniques. By focusing on the need for internal auditors to add value to the business in new ways, this research contributes to the literature on IA quality.

Practical implications

This study has significant implications for the effective management of IA departments. By promoting the application of LSS techniques in IA, lean auditing is enhanced, and IA can create value by improving the quality of its functions. Moreover, IA regulators can benefit from this study as it emphasizes providing guidance and training on LSS techniques to enhance IA skills.

Originality/value

This research is pioneering in applying LSS methodology to enhance the effectiveness and efficiency of internal auditing. It also considers the integration of lean thinking into current audit practices, making it unique and valuable in internal auditing research.

Details

International Journal of Lean Six Sigma, vol. 15 no. 4
Type: Research Article
ISSN: 2040-4166

Keywords

Article
Publication date: 16 August 2024

Xing Fang and Yuansheng Jiang

This paper aims to address the gaps in current research by exploring how blockchain technology influences corporate green innovation.

Abstract

Purpose

This paper aims to address the gaps in current research by exploring how blockchain technology influences corporate green innovation.

Design/methodology/approach

This study investigates the potential of blockchain technology to stimulate the green innovation of companies using the difference-in-difference model with a panel data set of 1,803 Chinese listed companies from 2012 to 2019.

Findings

The application of blockchain significantly increases the number of green invention patents obtained by companies but has no significant impact on green utility model patents, that is, blockchain applications improve the quality rather than the quantity of green innovation. The role of blockchain in promoting green innovation is particularly pronounced in state-owned enterprises, non-heavily polluting industries and older companies. The use of blockchain technology helps reduce sales costs and boosts research and development investments, thereby encouraging green innovation. Additionally, a company’s internal control quality plays a moderating effect.

Originality/value

Firstly, previous research on blockchain has primarily centered on its relationship with supply chain management. This article empirically tests the impact of blockchain applications on the green innovation of companies using the DID method. Secondly, current studies mainly explore the influencing factors on green invention patents. This article examines the impact of blockchain applications on both green invention patents and green utility model patents and identifies distinct influencing effects. Finally, this article introduces the internal control mechanism of enterprises into the DID model and explores the potential impact of the quality of internal control on the relationship between blockchain and green innovation.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

Open Access
Article
Publication date: 10 June 2024

David Castillo-Merino, Josep Garcia-Blandon and Gonzalo Rodríguez-Pérez

This paper aims to examine the effects of the 2014 European regulatory reform on auditors’ activity, the audit outcome and the audit market, with a focus on the Spanish market.

Abstract

Purpose

This paper aims to examine the effects of the 2014 European regulatory reform on auditors’ activity, the audit outcome and the audit market, with a focus on the Spanish market.

Design/methodology/approach

The research is based on in-depth, semistructured interviews with partners of the main audit firms operating in the Spanish market. This qualitative approach provides a precise identification of the cause-effect relationships of the new measures introduced by the European audit regulation.

Findings

The findings indicate that, based on auditors’ opinions, the costs of the main regulatory changes outweigh the benefits. The European Union (EU) Audit Regulation imposes more demanding provisions, such as an extended auditor’s report, mandatory audit firm rotation, more banned nonaudit services and stricter quality controls, resulting in substantial side effects on audit activity and the audit market. This could undermine the objective of enhancing the quality of audit services.

Originality/value

To the best of the authors’ knowledge, this is the first study to analyze the effect of the 2014 EU regulatory reform on audit activity, audit market and audit outcome based on auditors’ perceptions. The findings may be of interest to academics, professionals and regulators alike, as they offer valuable insights for assessing the effectiveness of the new audit provisions. Additionally, the qualitative methodology used facilitates a causal analysis of the key elements introduced by the regulations, potentially paving the way for future research avenues.

Details

Meditari Accountancy Research, vol. 32 no. 7
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 10 May 2024

Mahesh Singh, Jaiprakash Paliwal, Manoj Kumar Rao and Shirish Raibagkar

In India, national accreditation agencies stipulate that internal quality control in higher education institutions (HEIs) is to be institutionalized through internal quality…

Abstract

Purpose

In India, national accreditation agencies stipulate that internal quality control in higher education institutions (HEIs) is to be institutionalized through internal quality assurance cells that are responsible for implementing and controlling quality systems. As the concept of goal congruence is central to a control process, this study aims to examine whether goal congruence is observed in such institutions. The impact of the absence of goal congruence on the quality of performance in higher education was also examined.

Design/methodology/approach

This cross-sectional study measured the impact of goal congruence or the lack thereof on the performance quality of HEIs as defined in the evaluation criteria of the apex accreditation agency, the National Assessment and Accreditation Council. Two hypotheses were tested using t-tests and regression analysis. Focus group discussions were conducted to elicit participants’ suggestions.

Findings

The results showed a lack of goal congruence between HEIs’ quality goals and their faculty’s personal goals, which adversely impacts the quality of their performance, as indicated by an average disagreement of 81% on a ten-statement scale. Goal congruence as an independent variable explained 63% of the variability in HEIs’ performance quality, and the results were statistically significant, indicating that lack of goal congruence is an important contributor to poor performance among HEIs.

Originality/value

Accreditation of HEIs is a global practice; hence, the findings of this study and the importance of goal congruence apply not only to India but also to HEIs globally.

Details

Quality Assurance in Education, vol. 32 no. 3
Type: Research Article
ISSN: 0968-4883

Keywords

Article
Publication date: 8 June 2022

Parisa Saadat Behbahaninia

This study aims to examine the effects of agency cost on auditor choice. This paper also deals with the moderating role of the board’s financial expertise (Bfe) and the status of…

Abstract

Purpose

This study aims to examine the effects of agency cost on auditor choice. This paper also deals with the moderating role of the board’s financial expertise (Bfe) and the status of the internal control (Intecon) system on the relationship between agency cost and auditor selection.

Design/methodology/approach

This study’s sample consists of 1,040 firm-year observations of Iranian nonfinancial companies listed on the Tehran Stock Exchange from 2012 to 2019. The information required for this research is mainly extracted from Comprehensive Database of All Listed Companies (in Iran Stock Exchange). Data from 130 companies were obtained during the research period. This study used logistic regression to test the hypotheses.

Findings

The findings indicate that companies with higher agency costs choose the auditor from lower classes. As the proportion of financial expert members on the board increases, the intensity of this relationship will be reduced. Companies with higher agency costs choose the auditor from the lower classes, but the higher the ratio of financial expert board members, the more these companies will choose high-quality auditors. However, findings showed that the status of the Intecon system has no moderating effect on the relationship between agency costs and auditor selection.

Originality/value

The results of this study can expand the existing literature on the relationship between auditor selection and agency costs and the factors affecting this relationship, especially the Bfe and Intecon. This research has significant suggestions for regulators, stakeholders, shareholders and analysts in emerging economies that may encounter similar contextual implications.

Details

Journal of Financial Reporting and Accounting, vol. 22 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

1 – 10 of over 4000