Assessment of Internal Audit Efficiency in Corporate Governance: an Empirical Analysis of the Russian Companies’ Data

2019

Учёт. Анализ. Аудит, Vol 5, Iss 1, Pp 18-29 (2019)

Subject. Under conditions of economic stagnation and sanctions regime Russian companies are confronted with an especially acute problem of improving their efficiency as the major driver of attracting investments and mobilizing long-term funds. In this paper the implementation of internal audit system is considered as a tool to achieve the aforementioned goal. Purpose. The research objective is twofold: to assess the efficiency of internal audit in shareholder value creation and to reveal the determinants of the very existence of internal audit departments in companies’ organizational structure. Methodology. Empirical analysis of unbalanced panel data using fixed effects and random effects models as well as logit fixed effect models serves as a methodological basis for the research. The sample comprises data covering the 2005-2015 period for 125 publicly traded Russian companies representing non-financial sectors of economy. Results. The research results reveal that the existence of internal audit service in the company structure is positively related to shareholder value creation. Besides, a number of basic determinants of shareholder value are proved to be statistically significant. As for the analysis of the existence of internal audit service determinants, no statistically significant relation was found between the companies’ characteristics included in the model which, as may be supposed, could provide incentives for implementation of the internal audit service, and the actual existence of this service in company structure. Conclusions. The obtained results allow for the conclusion that the internal audit service can be considered as a value driver, enhancing the efficiency of business-processes and thus contributing to the attractiveness of companies for investors. The absence of statistically significant determinants of the establishment of internal audit service may indicate that currently in Russian publicly traded companies this decision is largely determined by personal intention of management to have such service in the firm structure.

article

Russian

Government of Russian Federation, Financial University, 2019.

внутренний аудит, служба внутреннего аудита, акционерная стоимость, российские компании, драйвер стоимости, эмпирическое исследование, internal audit, internal audit service, shareholder value, russian companies, value drivers, empirical study, Accounting. Bookkeeping, HF5601-5689