The Role of the Internal Auditor in Strengthening the Governance of Economic Organizations Using the Three Lines of Defense Model

Abstract

Purpose: This paper aims to investigate the impact of the three lines of defense (TLOD) in strengthening corporate governance in industrial companies in the Sultanate of Oman. Methodology: A questionnaire was used to collect data from industrial companies in the Sultanate of Oman. A total of 300 questionnaires were distributed; for the 159 valid questionnaires used for analysis, PLS-SEM was used in the data analysis. Results: The results showed a significant impact of the three variables (commitment of operational management to legal, regulatory, and ethical requirements; risk management, compliance, and quality functions; and the role of assertive internal auditing according to the third line of defense model) in strengthening corporate governance. Practical implications: The study indicates that the TLOD model plays a more decisive role in determining the strengthening of corporate governance, and therefore, the results of the study can help industrial companies to understand the role of the TLOD model in strengthening control procedures, risk management, and governance. Originality/value: The study constitutes a management strategy that assists organizations in diagnosing the degree of corporate compliance with the TLOD and identifying weaknesses in their procedures.

Turnover by Non-CEO Executives in Top Management Teams and Escalation of Commitment

“…Escalation behavior reflects the principal-agent conflict as the behavior of the managers does not align with the interests of the firm (Sleesman et al 2012). Corporate governance and internal auditing provide mechanisms for the alignment of the managers' incentives with those of the firm's principals (Shleifer and Vishny 1997;Tawfik et al 2023). The escalation literature suggests that strong corporate governance and monitoring incentives help alleviate the escalation of commitment by managers (Buchholtz et al 1999;Huang et al 2016;Sleesman et al 2018;Licht 2021).…”