Relevance of internal controls for risk management: empirical evidence from the perception of its executors and reviewers in a multinational company
ISSN: 1472-0701
Article publication date: 2 March 2023
Issue publication date: 3 August 2023
Abstract
Purpose
The perception of the relevance of risk management reports and the system of internal controls permeates the risk management of multinational companies. Shedding light on perceived relevance, on the one hand, can serve as a guide for improvements in communication between headquarters and subsidiaries; on the other hand, it can lead to greater involvement of subsidiaries in company policies. Thus, this study aims to analyze the relevance of internal controls for risk management in the perception of its executors and reviewers in a multinational company.
Design/methodology/approach
A survey was conducted with the executors and reviewers of the internal controls of a multinational company. To the collected data, structural equation modeling was applied.
Findings
The perceived relevance of internal controls by the subsidiaries directly and positively influences the perceived relevance of the reporting of their specific and standardized reports for all subsidiaries. In addition, the perception of the relevance of standardized reports for all subsidiaries demonstrates a direct and positive influence on the familiarity with the regulations regarding the reporting of internal controls.
Originality/value
To the best of the authors’ knowledge, this paper is the first to examine the relevance of internal controls for risk management in the perception of its executors and reviewers of subsidiaries of a multinational company. In this way, it provides a useful contribution to the literature and insights to promote improvements in the communication process between headquarters and subsidiaries of different countries regarding risk management reports and the system of internal controls.
Keywords
Acknowledgements
The authors are grateful to the anonymous reviewers and the editor for their constructive comments and guidance. This work was supported by the National Council for Scientific and Technological Development (Conselho Nacional de Desenvolvimento Científico e Tecnológico – CNPq), and the Coordination for the Improvement of Higher Education Personnel (Coordenação de Aperfeiçoamento de Pessoal de Nível Superior – CAPES), Brazil.
Citation
Beuren, I.M., Machado, V.N. and Dall Agnol, A.J. (2023), "Relevance of internal controls for risk management: empirical evidence from the perception of its executors and reviewers in a multinational company", Corporate Governance, Vol. 23 No. 6, pp. 1233-1250. https://doi.org/10.1108/CG-05-2022-0200
Publisher
:Emerald Publishing Limited
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