Challenges in Evaluating Corporate Governance: Evidence from Chief Audit Executives

50 Pages Posted: 20 Jan 2023 Last revised: 17 Mar 2025

See all articles by Lauren M. Cunningham

Lauren M. Cunningham

University of Tennessee - Haslam College of Business

Christie Hayne

University of Illinois at Urbana-Champaign

Terry L. Neal

University of Tennessee

Sarah E. Stein

Virginia Tech

Date Written: March 17, 2025

Abstract

Researchers and practitioners both emphasize the importance of sound corporate governance, yet we know little about how companies monitor and evaluate their governance systems on an ongoing basis. To bridge this gap, we interview 29 chief audit executives (CAEs) from publicly traded companies in the U.S. to learn about current practices and challenges faced in evaluating corporate governance. Our analysis reveals that internal audit’s current governance evaluation practices are often piecemeal and disconnected from the organization’s objectives. Key challenges include perceptions that management and the board are not willing participants, concerns that “effective” corporate governance is subjective and hard to measure, and issues encountered when communicating deficiencies to management and the board. Informed by the concept of decoupling from institutional theory, our findings reveal a need for additional research on corporate governance evaluations and consideration by policymakers regarding the rigor of internal audit’s governance evaluation practices.

Keywords: corporate governance, evaluation, internal audit, institutional theory, decoupling

JEL Classification: G34, M10, M14, M42

Suggested Citation

Cunningham, Lauren M. and Hayne, Christie and Neal, Terry L. and Stein, Sarah E., Challenges in Evaluating Corporate Governance: Evidence from Chief Audit Executives (March 17, 2025). Available at SSRN: https://ssrn.com/abstract=4330532 or http://dx.doi.org/10.2139/ssrn.4330532

Lauren M. Cunningham

University of Tennessee - Haslam College of Business ( email )

Accounting and Information Management
603 Stokely Management Center
Knoxville, TN 37996
United States

Christie Hayne

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
540-300-4577 (Phone)

Terry L. Neal

University of Tennessee ( email )

639 Stokely Management Center
Knoxville, TN 37996-0560
United States
865-974-2664 (Phone)
865-974-4631 (Fax)

Sarah E. Stein (Contact Author)

Virginia Tech ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
420
Abstract Views
1,739
Rank
149,756
PlumX Metrics