The Relationship between Corporate Governance and Firm Performance: The Effect of Internal Audit and Enterprise Resource Planning (ERP)

Abstract

This research aims to explore the effect of good corporate governance on the performance of listed companies in Saudi Arabia. In particular, the research focuses on the effect of effective internal audit and ERP on corporate governance and, subsequently, firm performance. A questionnaire was used to collect the data. The results indicated that effective corporate governance could be attained by having a good internal audit and ERP system. The results conclude that proper corporate governance positively affects firm performance, and effective internal audit activities and successful ERP implementation enhance corporate governance, eventually leading to better performance. The findings of this study are beneficial to Saudi listed companies and other GCC and their policymakers since social, political, and economic contexts are similar. Even though the study's findings provide extensive evidence regarding corporate governance and firm performance, this study has its limitation as respondents represented a small sample of listed companies and cannot be generalized to all listed companies.

Does Internal Audit Quality Improve Firm Performance? The Moderating Effect of Chief Audit Executive Gender

“…This result supports our first hypothesis, implying that internal audit quality enhances firm performance. This outcome is consistent with the findings of several prior studies (Hutchinson & Zain, 2009;Alflahat, 2017;Bengrich & El Ghadouia, 2020;Alsurayyi & Alsughayer, 2021). The results of model 2 show that internal audit gender moderation with internal audit quality (FCAE*IAFQ) has a positive and significant effect on firm performance (TQ) at the 1% level, implying that the presence of female CAE moderates with the IAF to strengthen Tunisian listed companies' financial performance.…”

“…Moreover, Jiang et al (2020) demonstrated that operations-related services provided by the IAF bring economic benefits to firms and improve operating performance. Along the same lines, Alzeban (2021) and Alsurayyi & Alsughayer (2021) indicated that the implementation of internal audit recommendations (a proxy for effective internal audit) enhances corporate governance and consequently leads to better firm performance in the context of Saudi Arabia. Despite the majority of studies highlighting the positive and significant association between internal audit quality and firm performance, the results of some previous research provide no evidence of this association (Ejoh & Ejom, 2014;Muchiri & Jagongo, 2017;Elewa & El-Haddad, 2019).…”

Research on the value increment of internal audit of power grid enterprises

“…Internal audit has always been the last line of defense in the "immune system" of enterprise management [3][4][5] . In order to adapt to the development of the new era, we should use a more systematic and scientific approach, integrate mature big data analysis technology, quickly find the problems and risks arising from enterprise operations, and timely propose solutions [6][7][8] .…”

Impacts of Firm Performance on Corporate Social Responsibility Practices: The Mediation Role of Corporate Governance in Ethiopia Corporate Business

“…On the contrary, Ahmed and Hamdan [65] explores the relationship between corporate governance and firm performance and concludes that the two are unconnected. However, Alsurayyi and Alsughayer [66] examines the impact of corporate governance on firm performance and determines that corporate governance is strongly linked to firm performance. Furthermore, Del Miras-Rodríguez and Martínez-Martínez [67] looked at the impact of good corporate governance on the performance of publicly listed companies, and found that proper corporate governance has a positive impact on firm performance.…”