THE EFFECT OF INTERNAL GOVERNANCE ON CORPORATE FINANCIAL CRIME OF COMPANIES IN MALAYSIA

  • Wan Nailah Abdullah Faculty of Accountancy, Universiti Teknologi Mara, Malaysia
  • Roshima Said Faculty of Accountancy, Universiti Teknologi Mara, Malaysia
  • Kiymet Caliyurt Faculty of Business Administration and Economics, Trakya University, Edirne, Turkey
Keywords: Financial crime, Internal governance, Audit committee, Risk committee, Ownership structure

Abstract

This empirical study proposes to examine one of the main areas in corporate governance i.e., the internal governance factors and their relationship with corporate financial crime and to find out whether their effectiveness as a corporate governance mechanism is still relevant in the prevention of corporate financial crime. The internal governance factors tested in the study are audit diligence, audit size, employee shares option scheme, managerial ownership and stand-alone risk management committee. The research was carried out by using a web-based data collection for corporate financial crime cases. The findings indicate a significant relationship between the existences of a stand-alone risk committee with corporate financial crime incidences. The result of the study serves as an empirical indicator for a firm’s consideration in deciding on the implementation of a stand-alone risk committee from its audit committee. Both the descriptive and correlation analyses produced by this paper provide new insights into the extent of corporate financial crime, as well as the empirical evidence of the effectiveness of having a stand-alone risk committee.

Published
2020-06-19
How to Cite
Abdullah, W. N., Said, R., & Caliyurt, K. (2020). THE EFFECT OF INTERNAL GOVERNANCE ON CORPORATE FINANCIAL CRIME OF COMPANIES IN MALAYSIA. Journal of Governance and Integrity, 2(2), 53-64. https://doi.org/10.15282/jgi.2.2.2019.5468
Section
JGI Vol. 2, Issue 2, July 2019