THE EFFECTIVENESS OF WHISTLEBLOWING POLICY DETERMINED BY BOARD CHARACTERISTICS: INTERNAL AUDITORS’ PERCEPTIONS
Whistleblowing is widely considered as a primary internal control mechanism to deter corporate malpractices as proven by various surveys. Regulators all around the world vouch for the implementations of whistleblowing policies in organisations. Studies on whistleblowing policy have been emergi...
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| Format: | text::Thesis |
| Language: | English |
| Published: |
2023
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| Summary: | Whistleblowing is widely considered as a primary internal control mechanism to deter
corporate malpractices as proven by various surveys. Regulators all around the world
vouch for the implementations of whistleblowing policies in organisations. Studies on
whistleblowing policy have been emerging lately but those studies largely focused on
content analysis and level of policy disclosure. The present study, on the other hand,
provides an understanding on the elements that make the policy effective and how do
the characteristics of board of directors impact the policy’s effectiveness. In that
respect, the present study aims to explore two objectives. Firstly, the present study
intends to measure the effectiveness of whistleblowing policy from the perceptions of
in-house internal auditors in Malaysian public-listed companies. Secondly, the impact
of board characteristics towards the effectiveness of whistleblowing policy is also
explored. 65 consenting companies represented by one in-house internal auditor
participated in the online survey administered by the present study. The perceptions of
the in-house internal auditors on the effectiveness of whistleblowing policy in their
respective companies were determined through descriptive analysis. Specifically, the
effectiveness of the policy was measured based on six different elements which were
the accessibility of whistleblowing policy, communication and reporting channels,
identity protection of the whistleblower, eligible users of whistleblowing policy,
complaint recipient and the investigation of reported wrongdoings. As such, the
present study found that apart from the elements of communication and reporting
channels as well as complaint recipient, the in-house internal auditors to an extent,
agreed that the whistleblowing policies in their companies are effective because they
are easily accessible, provide necessary protection, highlight the eligible users of the
policy and provide investigations for the reported wrongdoings. As for the second
objective, using the PLS-SEM method, the impact of five board characteristics
particularly board size, board independence, audit committee, board financial
expertise and board gender diversity were investigated with the effectiveness of
whistleblowing policy. Results revealed that although with a small effect size, board
independence was found to be significantly associated with the effectiveness of
whistleblowing policy as opposed to board size, audit committee, board financial
expertise and board gender diversity which did not have significant relationships with
the policy’s effectiveness. Therefore, the present study concludes that the
independence of board of directors plays a crucial in the effectiveness of
whistleblowing policy. |
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