The impact of oversight mechanisms on quality internal control and its relationship with firm operating performance
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Date
2007
Authors
Hock Chye, Ong
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This study examines the relationship between mandatory and
voluntary disclosures on internal control, as well as the relationships between
audit committee and internal audit function on the quality of internal control of
public listed companies on Bursa Malaysia. The study also examined the
relationship between the quality of internal control on operating performance.
It used agency theory as the underpinning theory, which postulated internal
control disclosure as a tool shareholders used to monitor the quality of
internal control designed by management. The study employed content
analysis for measuring the quality of internal control. Questionnaires were
sent to 181 public listed companies on Bursa Malaysia and the study received
responses from 141 companies. Questionnaires were used to collect the data
on internal audit function and annual reports were used to collect the data on
audit committee and operating performance. The study found a significant
relationship between mandatory and voluntary disclosures on internal control.
This meant complying with the mandatory disclosure of Bursa Malaysia leads
to higher voluntary disclosures. Of the two board oversight mechanisms, the
study found a significant relationship between internal audit function and the
quality of internal control but did not find a significant relationship between
audit committee and the quality of internal control. Also, the study did not find
as well a significant relationship between the quality of internal control on
operating performance.
Description
Ph.D
Keywords
Industrial technology