Exploring the Nexus between Internal Control Structures and Good Corporate Governance

Abstract

This study explores the nexus between internal control structures and good corporate governance, aiming to provide a comprehensive understanding of their interrelationship. The research objective is to investigate the impact of internal control effectiveness on organizational performance and the mediating role of governance mechanisms. The study employs a mixed-method approach, integrating empirical analysis and theoretical frameworks from corporate governance, organizational behavior, and management theory. Data were gathered through a combination of literature review, case studies, and statistical analysis of financial performance metrics. The findings reveal a positive association between internal control effectiveness and financial reporting quality, emphasizing the pivotal role of robust control mechanisms in upholding transparency and accountability. Additionally, the study highlights the importance of board oversight, organizational culture, and stakeholder engagement in shaping control practices and governance outcomes. The mediating role of internal controls in the relationship between governance mechanisms and organizational performance underscores the interconnectedness of governance, risk management, and performance outcomes. Practical implications include recommendations for organizational leaders to prioritize board composition, independence, and expertise, as well as to cultivate a culture of integrity and accountability. Overall, the study contributes to advancing knowledge in the field of organizational governance and control, emphasizing the need for interdisciplinary research and holistic approaches to promote sustainable organizational success.