Does forensic audit influence fraud control? Evidence from Nigerian deposit money banks

Corruption in government organizations is an important and relevant topic to study because of its impact on the state in terms of financial losses and a decrease in the quality of human development. This study is also relevant because previous analyses are still limited in their modeling and measuring comprehensive fiscal decentralization variables. This study aims to examine the effect of fiscal decentralization and quality of government on the level of corruption and the impact of corruption on the human development index. The sample of this paper comprises 113 local governments on the island of Java, Indonesia, for the period 2015–2018. Statistical testing was carried out using Partial Least Squares-Structural Equation Modeling (PLS-SEM). The test results show that fiscal decentralization has a positive effect on corruption with a path coefficient of 0.100 and is significant at 5% alpha. Likewise, poor governance (proxied by internal control weaknesses) has a positive effect on the level of corruption with a coefficient of 0.062 and is significant at an alpha of 10%. The results of the PLS-SEM test also show that corruption has a negative impact on the human development index with a coefficient of –0.206 and is significant at 1% alpha. The practical significance of this study is the importance of the internal control system reliability as a complementary variable for fiscal decentralization to prevent corruption.

This study examines the relationship between corporate social responsibility and the effectiveness of internal control, while simultaneously examining board gender diversity to check whether female directors contribute to corporate transparency or not. The sample of the study comprises 15,231 firm-year observations of companies listed on the Shanghai and Shenzhen stock exchanges from 2013 to 2018. The raw data for variable calculation come from authoritative and reputable sources, such as China Stock Market and Accounting Research (CSMAR), DIB Internal Control database, and RKS CSR score. The empirical study shows that socially high-performing firms possess a more effective internal control mechanism. However, the paper failed to find a positive association of gender diversity on the board with internal control effectiveness, and failed to attest reinforcing effect of female directors on internal control in socially responsible firms. This study suggests that in China’s institutional environment, female directors are unlikely to contribute to increased corporate transparency. This study is useful for both regulators and company management to establish a master plan and tactics for board composition to improve corporate transparency, taking into account the effect of the investigated phenomena within the jurisdiction under study.

Acknowledgment
This paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “EMBRACING EU CORPORATE SOCIAL RESPONSIBILITY: CHALLENGES AND OPPORTUNITIES OF BUSINESS-SOCIETY BONDS TRANSFORMATION IN UKRAINE” 101094100 — EECORE — ERASMUS-JMO-2022-HEI-TCH-RSCH-UA-IBA / ERASMUS-JMO-2022-HEI-TCHRSCH https://eecore.snau.edu.ua/

The purpose of this study is to investigate the relationship between pay disparity and a company’s investment inefficiency, and to explore the moderating influence of investment in internal control personnel on this relationship. The global concern over pay disparity has intensified as executive compensation soars to unparalleled heights, while employee wages remain static. Utilizing a fixed-effect regression model and analyzing 5,407 observations from Korean listed companies between 2018 and 2020, the study shows a positive association between pay disparity (coef = 0.034, p-value < 0.01) and investment inefficiency, with pay disparity increasing the level of investment inefficiency by fostering overinvestment. Furthermore, the study shows that the interaction term between pay disparity and quantitative (coef = –0.246, p-value < 0.01) and qualitative (coef = –2.104, p-value < 0.01) investments in internal control personnel is negative and significant, indicating that the positive link between pay disparity and investment inefficiency is lessened when there is a higher quantitative and qualitative investment in internal control personnel. By offering a more comprehensive understanding of the conflicting evidence about the impact of pay disparity and the role of investment in internal control personnel in moderating the negative effect of pay disparity on investment efficiency, this study contributes to the existing literature. The findings of the study suggest that companies aiming to minimize investment inefficiency should consider not only addressing pay disparity but also investing in internal control personnel.