Review of the Literature on Performance Evaluation of Foreign Subsidiaries

Kretschmer, Katharina

doi:10.1007/978-3-8349-9922-1_3

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“…In the analysis of the internal controls of multinationals, divergences may arise from the vertical relationship between the superior strategy entity (headquarters) and the lower-level units (subsidiaries; Kretschmer, 2009). Among the divergences are those arising from the perceptions of internal controls (PIC) between the head office and subsidiaries.…”

Section: Introductionmentioning

confidence: 99%

Relevance of internal controls for risk management: empirical evidence from the perception of its executors and reviewers in a multinational company

Beuren

Machado

Agnol

2023

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Purpose The perception of the relevance of risk management reports and the system of internal controls permeates the risk management of multinational companies. Shedding light on perceived relevance, on the one hand, can serve as a guide for improvements in communication between headquarters and subsidiaries; on the other hand, it can lead to greater involvement of subsidiaries in company policies. Thus, this study aims to analyze the relevance of internal controls for risk management in the perception of its executors and reviewers in a multinational company. Design/methodology/approach A survey was conducted with the executors and reviewers of the internal controls of a multinational company. To the collected data, structural equation modeling was applied. Findings The perceived relevance of internal controls by the subsidiaries directly and positively influences the perceived relevance of the reporting of their specific and standardized reports for all subsidiaries. In addition, the perception of the relevance of standardized reports for all subsidiaries demonstrates a direct and positive influence on the familiarity with the regulations regarding the reporting of internal controls. Originality/value To the best of the authors’ knowledge, this paper is the first to examine the relevance of internal controls for risk management in the perception of its executors and reviewers of subsidiaries of a multinational company. In this way, it provides a useful contribution to the literature and insights to promote improvements in the communication process between headquarters and subsidiaries of different countries regarding risk management reports and the system of internal controls.

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Section: Introductionmentioning

confidence: 99%