Does corporate governance moderate the relationship between internal control system effectiveness and SMEs financial performance in Ghana?

Musah, Alhassan; Padi, Abigail; Okyere, Bismark; Adenutsi, Deodat E.; Ayariga, Charles

doi:10.1080/23311975.2022.2152159

Cited by 15 publications

(32 citation statements)

References 42 publications

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“…Control activities guarantee management controls and directions on financial reporting (Chalmers et al, 2019). Banks would have to (re)consider relevant control activities where policies and procedures are in place for easier recording and accounting for transaction in accordance with rules (Chang et al, 2019;Musah et al, 2022). The results further shows that risk assessment had a significant impact on organizational effectiveness.…”

Section: Practical Implicationsmentioning

confidence: 96%

“…Chen et al (2020) argue that risk assessment facilitates the identification of relevant risks that could affect the achievement of management objectives. Several authors contend that risk attitude and management are essential for organizational effectiveness (Chiu & Wang, 2019;Musah et al, 2022;Ngari, 2017). Similarly, several authors postulate that risk assessment help prioritize specific objectives that have a substantial impact on organizations control systems (Schroy, 2010;Hamdan, 2019;Taiwo et al, 2016).…”

Section: Risk Assessment and Organizational Effectivenessmentioning

confidence: 99%

“…Internal control mechanisms safeguard firm's assets, improve financial and operational performance and assure policy compliance (Hoai et al, 2022;Johnston & Zhang, 2018;Omar & Yussuf, 2021). Consequently, the banking industry should promote the enhancement of internal control systems since the efficacy and quality of the internal control system are key factors in an entity's ability to survive (Chalmers et al, 2019;Lawson et al, 2017;Musah et al, 2022). The banking industry would have to adopt, design and implement proactive internal control systems to enhance operational efficiency, effectiveness and competitive advantage.…”

Section: Practical Implicationsmentioning

confidence: 99%

“…(2020) argue that risk assessment facilitates the identification of relevant risks that could affect the achievement of management objectives. Several authors contend that risk attitude and management are essential for organizational effectiveness (Chiu & Wang, 2019; Musah et al. , 2022; Ngari, 2017).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…The efficacy and quality of the internal control system implemented by organization's management are key factors in an entity's ability to survive (Chalmers, Hay, & Khlif, 2019; Lawson, Muriel, & Sanders, 2017; Musah, Padi, Okyere, Adenutsi, & Ayariga, 2022). The degree to which internal controls are appropriately implemented to ensure continuous growth in returns is obvious as a result of the changing competitive environment (Nanzala & Ingabo, 2021; Ndungu, 2014; Omar & Yussuf, 2021).…”

Section: Introductionmentioning

confidence: 99%

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Evaluating the impact of internal control systems on organizational effectiveness

Otoo,

Kaur,

Rather

2023

LBSJMR

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PurposeInternal control systems are critical to an organization's efficiency and promotes the adherence to norms and rules. The purpose of this study is to evaluate the impact of internal control systems on banking industry effectiveness.Design/methodology/approachData were collected from 15 commercial and 20 rural banks. The hypothesized relationships were supported by the data. A structural equation modeling was applied in testing the conceptual model and hypothesis. Confirmatory factor analysis was conducted to establish validity and reliability of the dimensions.FindingsThe results show that organizational effectiveness was significantly impacted by three dimensions of internal control systems: control activities, control environments and risk assessment. However, the impact of monitoring of control on organizational effectiveness was not significant. The results also show a nonsignificant impact of information and communication on organizational effectiveness.Research limitations/implicationsSince the current study concentrated on the banking sector with its distinct characteristics, the generalizability of the conclusions may be limited.Practical implicationsThe study's findings may aid decision-makers and stakeholders in the adoption, designing and implementation of proactive internal control system to enhance operational efficiency, effectiveness and competitive advantage.Originality/valueThe study advances the literature by empirically evidencing that internal control systems impact organizational effectiveness.

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Section: Practical Implicationsmentioning

confidence: 96%