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- Title
Exploring the determinants of internal audit: Evidence from ownership structure.
- Authors
Rönkkö, Jaakko; Paananen, Mikko; Vakkuri, Jarmo
- Abstract
The internal audit literature suggests that firms can gain significant added value from internal audit in terms of improving governance processes, reducing audit fees, and detecting fraud. Nonetheless, not all firms use internal audit. A growing literature examining the determinants of internal audit has identified a number of different determinants, such as firm size, strong commitment to risk management, existence of an audit committee, and an independent board chair. This paper contributes to the existing literature by examining the effects of ownership structure on the voluntary use of internal audit. The logistic regression model of this study is based on data from 107 firms listed on NASDAQ OMX Helsinki. It shows that ownership structure is a significant determinant of internal audit. Specifically, the paper shows that foreign ownership, dispersed ownership, and state ownership increase the likelihood of a firm using internal audit.
- Subjects
INTERNAL auditing; BUSINESS enterprises; CORPORATE governance; CORPORATE finance; FINANCIAL statements
- Publication
International Journal of Auditing, 2018, Vol 22, Issue 1, p25
- ISSN
1090-6738
- Publication type
Article
- DOI
10.1111/ijau.12102