Title: Effect of internal audit function on corporate governance quality: evidence from Lebanon

Authors: Abdul-Nasser El-Kassar; Walid Elgammal; Mirna M. Bayoud

Addresses: Department of Information Technology & Operations Management, The Lebanese American University, P.O. Box 13-5053, Chauran, Beirut 1102 2801, Lebanon ' Department of Finance and Accounting, The Lebanese American University, P.O. Box 13-5053, Chauran, Beirut 1102 2801, Lebanon ' Department of External Audit, Deloitte & Touche, Beirut, 11-961, Lebanon

Abstract: The internal audit function is a compliance mechanism that promotes good corporate governance. Recent studies detected a need to improve corporate governance structures in developing countries. This study evaluates the effects of the internal audit function on the quality of corporate governance in the context of multinational corporations operating in Lebanon. The results revealed that the quality of internal audit function significantly affects corporate governance, particularly on its audit committee and management aspects. Moreover, the results showed that maintaining a high level of independence and expertise in the audit department can have a great influence on the overall quality of corporate governance, as well as on the effectiveness of both the audit committee and management. The results also indicated that the reliability of the internal audit significantly influences the management characteristic of corporate governance. In contrast, the board of directors and external auditors are less influenced by the internal audit.

Keywords: internal audit function; corporate governance; audit committee; board of directors; governance quality; Lebanon; developing countries; external auditors.

DOI: 10.1504/IJCG.2014.062349

International Journal of Corporate Governance, 2014 Vol.5 No.1/2, pp.103 - 117

Received: 11 Apr 2013
Accepted: 01 Mar 2014
Published online: 30 Apr 2015 *

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