Enterprise resource planning systems implementation and the implications for the internal audit function

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.Corporate governance has received increased attention from both regulators and researchers in recent years resulting in highlighting the significance of the internal audit function (IAF). Another transformative force on the IAF has been the dissemination of enterprise resource planning (ERP) systems which have an impact on the legitimacy of the IAF if it is not suitably adapted. However, there is insufficient knowledge about the adaptations of the IAF which are required if it is to maintain its essential role in governance. This thesis extends our knowledge by exploring and theorising the adaptation of the IAF after ERP introduction. This thesis uses institutional theory as a lens through which to investigate how the IAF responds to the external governance pressures and the internal pressures of the control logic following the introduction of an ERP system. Data were gathered from two listed companies in the food and beverage sector and two large banks operating in Egypt, where one of each pair is an international company and the other is a national company. Interviews and focus groups were conducted with all stakeholders in addition to careful analysis of a number of internal and external documents related to the ERP and the IAF. The study finds that governance pressures related to the IAF determine the legitimisation criteria for the IAF. There is little coercive governance pressure on the IAF in Egypt. However, international companies with operations in Egypt have introduced normative governance pressures as a result of their compliance with stock exchange rules in other jurisdictions. Therefore, mimetic behaviour has helped in transferring the IAF response to ERP implementation. ERP systems carry new control logics based on some interlinked assumptions, which have affected the IAF. The ERP system’s control logic is aligned with the corporate governance goals and objectives, but further alignment is needed to make the best use of the ERP system in enhancing internal control. The introduction of an ERP system produces uncertainty about the IAF’s activities, which motivates it to adapt by changing its practice and structure. The changes in the IAF are dependent on the strategic response adopted by the auditors, which range from acquiescence to defiance. These responses were found to change over time. The differences in responses result in different outcomes for the IAF adaptation. In the international companies the implementation of an ERP system motivates the IAF to be integrated and have a comprehensive scope, whereas in the national companies change was resisted and the role of the IAF was significantly diminished. The IAF’s legitimacy maintaining strategies depend on the coercive and normative governance pressures, which give directions about how to maintain legitimacy. This study offers an explanation of how information systems contribute to the IAF’s professional stability or change and of how macro-governance pressures can bind micro-IAF practice within organisations.

Investigating the associations between executive compensation and firm performance: Agency theory or tournament theory

Abstract Purpose – While there have been extensive empirical investigations of pay-performance sensitivity, the perspective of performance-pay has received less attention to date. While executive compensation is sensitive to firm performance, firm performance is also likely to be affected by executive compensation. Adopting multiple theoretical perspectives, the purpose of this paper is to examine whether executive compensation has a greater influence on firm performance or whether the latter has a greater influence on compensation. Design/methodology/approach – Using data from a five-year period (2010-2014) for Financial Times and Stock Exchange 350 companies, the authors employ a set of simultaneous equation modelling to jointly investigate, after accounting for endogeneity problem, the mutual association of executive compensation and firm performance by employing four control variables (board size, non-executive directors, leverage and boardroom ownership). Findings – The authors find strong evidence for the greater influence of executive compensation on firm performance than the pay-performance framework. This finding supports the tournament theory compared with the agency perspective. Research limitations/implications – Inevitably, there are limitations in a wide-ranging study of this nature that could be addressed in future research. As any empirical study utilising company data, there may be concerns to the effect of survivorship bias and the manner in which companies have reorganised, if there is any, themselves during the period under examination. There are also issues as to missing data, some measures relating to both executive compensation and corporate governance are not provided by the BoardEx database. Practical implications – The study results provide evidence that using the tournament perspective by remuneration committees as a guide for determining executive compensation helps in achieving better performance. This helps in developing appropriate mechanisms for setting executive remuneration. Originality/value – This paper combines an empirical investigation of the frameworks of pay-performance and performance-pay and develops a system of six simultaneous equations to examine the associations between executive compensation and firm performance. Keywords Firm performance, Executive compensation, FTSE 350, Simultaneous equations modelling Paper type Research pape

Internal Audit Function response to ERP Systems Implementation

The internal audit function (IAF) importance has been highlighted by legislative and professional responses to various financial scandals. On the other hand, Enterprise Resource Planning (ERP) systems have institutional logics in controlling business process that pressure the IAF to change. Based on the institutional theory a conceptual framework is formulated to explore the IAF change as a response to ERP systems implementation, wherein ERP systems are considered as carrier of new institutional logics. Interpretive approach has been adopted by conducting an in-depth case study in a multinational organization in Egypt. Interviews with variety stakeholders were chosen as the primary data collection method besides careful examination of available documents. Data have been analyzed using directed content analysis based on coding the transcribed interviews. The study results are enhancing the understanding of the IAF change and provide additional lessons that could be useful in improving the IAF in organizations that implement ERP systems. Keywords ERP, SAP, Internal Audit, Corporate Governance, Case Study, Interpretive, Egypt, Content Analysis

Drivers of convergence/divergence of corporate governance codes of MENA countries

This study aims to fill an existing gap in the regional corporate governance research by investigating the extent of and the drivers behind the convergence/divergence of the corporate governance codes among Middle Eastern and North African (MENA) countries comparing to the globally known Organization for Economic Cooperation and Development (OECD) principles of corporate governance. The results of the study revealed that the convergence level of the codes among the countries and compared to OECD principles significantly varies among countries, ranging from 31% to 73%. The results show that the adopted governance principles in the codes are ‘decoupled’ from legitimation concerns and focus on efficiency goals. The macroeconomic factors of MENA countries do not consistently reflect the convergence score of the codes with the OECD principles. The institutional quality factors of MENA countries are not aligned with their codes. The study provides several important implications for regulators, firms and other stakeholders

A global trend of the electronic supply chain management (e-SCM) research: A bibliometric analysis

© ExcelingTech Pub, UK. Research about electronic supply chain management (e-SCM) has been initiated on 2000, during the advancement of the internet and the information and communication technology (ICT). Since then, e-SCM attracted the attention of many researchers and various studies were conducted. This study aims at drawing the trends of the e-SCM research using bibliometric analysis of all the up to date e-SCM publications that has been indexed in Google Scholar and offer some research ideas in e-SCM. E-SCM related keywords have been used to search in the Google Scholar database. Analysed parameters include year of publication, publication type, language of publication, citation analysis, title analysis, and authorship patterns. The findings show that the first publication on e-SCM was in 2000 and the e-SCM publications reached its peak during 2009. Journal articles type is the most common type that has been published compared to conference paper and other publication types. English language is the dominant publication language. Three publications on e-SCM have been cited more than 100 times. This study also found that the word "analysis" and "study" are the common words used in the title of the publications and most of the publications in e-SCM have been written by a single author

Mapping of Internal Audit Research: A Post-Enron Structured Literature Review

Purpose — This paper reviews the field of internal auditing (IA) post-Enron to develop insights into how IA research has developed, offer a critique of the research to date and identify ways that future research can help to advance IA. Design/methodology/approach — A structured literature review (SLR) was used to analyse 471 papers from 64 journals published between 2005 and 2018 based on a number of criteria; namely, author, journal type, journal location, year, theme, theory, nature of research, research setting, regional focus, method and citations. Findings — The IA literature has not significantly contributed to knowledge of the internal audit function (IAF), and we still know relatively little about the factors that contribute to making the impact of IA practice effective and measurable. The IA literature is US dominated (authors and journals), focused on the American context (publicly listed companies), reliant on positivist analyses and largely makes no explicit reference to theory. Central regions (emerging economies) and key organisational settings (private SMEs and not-for-profit organisations) are largely absent in prior IA research. This paper evaluates and identifies avenues through which future research can help to advance IA in order to address emerging challenges in the field. Originality/value — This is the first comprehensive review to analyse IA research in the postEnron period (2005–2018). The findings are relevant to researchers who are looking for appropriate research outlets and emerging scholars who wish to identify their own research directions. Keywords — Internal audit, internal audit function, structured literature review, Enron Paper type — Literature revie

Different marches of the machines: Institutional change and identity work of professionals.

This study examines how the introduction of new technology had a differential effect of the work of a matched set of two workgroups of professionals. One group of internal auditors, at a major multinational corporation based in an emerging market, embraced the new methods of working, prompting new identity creation that reinforced their adherence to one of the conflicting institutional logics, and increase their professionalism. The other group, also internal auditors but working at a major domestic company in the same industry and country, resisted the change, allowing management to exploit the opportunity to undermine the professionalism of the workgroup, while engaging in symbolic management to reap the external benefits of what looked like good corporate governance. The study demonstrates, theoretically, the role that identity formation plays (or may not play) in embedding institutional change, and how a professional logic can be reconciled with organization identification. It also shows, practically, how in certain conditions resistance to technology can disrupt professional integrity

The effect of internal control and corporate social responsibility on conditional accounting conservatism: Evidence from France

This study examines the impact of internal control (IC) and corporate social responsibility (CSR) on conditional accounting conservatism (CAC). We employ legitimacy theory to understand whether managers adopt CSR reports and IC systems to seek legitimacy through symbolic actions or whether they do so to provide substantive actions to their stakeholders. We adopt a multivariate analysis for a sample of 98 French companies belonging to the SBF 120 index during the period between 2012 and 2021. All accounting and stock market information is extracted from the Thomson Reuter database (Datastream) and the Thomson Reuters ASSET4 ESG database. We found that both IC and CSR have a negative and significant impact on CAC; hence, managers may use CAC levels as a legitimizing tool for corporate activities. French companies are generally characterized by strong IC systems, suggesting a low demand for conditional conservatism. Socially responsible companies may have fewer agency issues and therefore will not practice accounting conservatism (AC) in a pronounced way. Distinct from the previous literature, our study examines the impact of IC as well as CSR on CAC, which provides useful insights regarding how stakeholder pressure, in terms of reporting on social responsibility and maintaining effective control systems, interacts with and impacts upon managers’ decisions to adopt CAC in the French context. Given the position of France after Brexit and the new laws adopted regarding an emphasis on the social dimension in corporate reporting, protecting stakeholders’ interests, and adopting conservatism, it is worth using such a context to gain a better understanding of AC, as this will enrich the literature

Corporate reporting on the Sustainable Development Goals: A structured literature review and research agenda

Purpose The Sustainable Development Goals (SDGs) framework emerged as a guidepost for the transition to sustainable development. To achieve this transition, companies are encouraged to integrate these goals into their business strategies, processes and corporate reporting cycle. The purpose of this paper is to review and critique the corporate SDGs reporting literature, develop insights into the state of this research field and identify a future research agenda. Design/methodology/approach Using a structured literature review (SLR) methodology, the paper reviews 65 empirical papers published in this field to identify how the current research is developing, offers a critique and identifies future research avenues to advance this field. Findings Corporate SDGs reporting is developing as a research area of great importance. The findings reveal that current SDGs reporting literature lacks theorisation, overly focusses on publicly listed companies and succinctly describes organisations’ engagement with the SDGs as superficial. Surprisingly, regions such as North America, the UK and other emerging economies have received less attention from scholars. Further, only a few authors have specialised in this field, and there currently exists low levels of international collaborations among authors as well as practitioners. Research limitations/implications The paper provides a novel contribution to the emerging field of corporate SDGs reporting. The key theoretical implications from this study’s SLR include the need for more interventionist research. Although there is an increasing number of accounting scholars developing research within this field, the prevailing research is concentrated on corporate SDGs engagement, drivers of SDGs reporting and scope of SDGs reporting. Furthermore, the scientific discourse remains largely under-theorised with positivist framings primarily focussed on the “what” questions. Thus, a modification to the current approaches and research methods is necessary to advance this field further. Practical implications The study provides practitioners with valuable insights into the current state of corporate reporting on the SDGs. To achieve more substantive engagement and reporting, a deeper understanding of the factors that influence corporate behaviour and disclosure practices is necessary. In particular, the study identifies new opportunities for practitioners to enhance the value relevance of corporate SDGs reporting. Originality/value The paper offers a comprehensive structured review of the empirical papers published on corporate SDGs reporting. It contributes to deepening this nascent research field by identifying five distinct areas where accounting and business scholars may focus to advance the field further and contribute to achieving the SDGs agenda

To Blow or Not to Blow the Whistle? An Islamic Framework

In this paper, we draw upon Islamic teachings to address two questions. How do Islamic ethics deepen and advance our understanding of the whistleblowing act? To what extent are Islamic ethics of whistleblowing promoted in practice? First, we have undertaken a thematic content analysis of the holy book of Qur’an, supported by the Sunnah (Prophetic Traditions). This has yielded a novel Islamic ethics-based framework of whistleblowing comprising the five aspects of the whistleblowing process: What should one blow the whistle about? Who should blow the whistle? Why should one blow the whistle? How should one blow the whistle? And to Whom should one blow the whistle? Second, using the developed framework, we have analyzed the whistleblowing policies of 20 Islamic banks and financial institutions across 11 countries. This analysis reveals that there exists a narrow view of what ought to be reported as wrongdoings, a confined scope of potential whistleblowers, a lack of connection with Islamic motivations, missing steps in the actual whistleblowing process, and a lack of gradation in relation to rectifying corrupt acts, thus highlighting a framework–policy gap. This is the first study to conceptualize the whistleblowing process from an Islamic perspective. The developed framework offers guiding procedures that individuals can consult to guide whistleblowing reasoning behavior and that organizations can use while developing whistleblowing policies. It also serves as a foundation for the development of organizational whistleblowing policies in different sectors