The Impact of Chief Audit Executive’s Leadership Style and Senior Management Support for Internal Audit Function on Corporate Governance Effectiveness with the Moderating Effect of Audit Committee Characteristics: Evidence from Yemen

  • Abdulrahman Mohammed Al-yazidi King Khalid University, Abha, Kingdom of Saudi Arabia
  • Md. Faruk Abdullah Faculty of Business and Management, University Sultan Zainal Abidin, 21300 Kuala Nerus, Malaysia
  • Adeeb A. Alhebry King Khalid University, Abha, Kingdom of Saudi Arabia
Keywords: Yemen, Commercial banks, AC characteristics, CAE leadership style, Senior Management Support, CG Effectiveness


The objective of this paper is to determine the relationship between the Chief Audit Executive's (CAE) leadership style and senior management support for the internal audit function (IAF) as determinants of IAF quality and corporate governance (CG) effectiveness in Yemeni commercial banks. This article also investigates the extent to which the characteristics of the audit committee (AC) influence the link between CAE leadership style, support senior management for IAF, and CG effectiveness. The data was acquired using questionnaires delivered to respondents in Yemeni commercial banks, of which 158 valid questionnaires were obtained for analysis. Smart PLS 3 was used to analyse the data and test the hypotheses. The PROCESS macro approach was also utilised to evaluate the influence of AC characteristics on the association between CAE leadership style, senior management support for IAF, and CG effectiveness. An affirmative substantial correlation was found between CAE leadership style and senior management support for IAF, and CG effectiveness. Furthermore, the study found that AC characteristics favourably influence the association between CAE leadership style and CG effectiveness. However, AC characteristics do not alter the association between senior management support for the IAF and CG effectiveness. The findings improve the IAF's quality of determinants to enhance CG in developing countries, such as Yemen.


Download data is not yet available.


Abdullah, R., Ismail, Z., & Smith, M. (2018). Audit committees’ involvement and the effects of quality in the internal audit function on corporate governance. International Journal of Auditing, 22(3), 385–403.

Abernathy, J. L., Beyer, B., Masli, A., & Stefaniak, C. (2014). The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness. Advances in Accounting, 30(2), 283–297.

Ahmad, N., Othman, R., Othman, R., & Jusoff, K. (2009). The effectiveness of internal audit in Malaysian public sector. Journal of Modern Accounting and Auditing, 5(9), 53.

Al-Jaifi, H. A., Al-Rassas, A. H., & Al-Qadasi, A. (2019). Institutional investor preferences: Do internal auditing function and audit committee effectiveness matter in Malaysia? Management Research Review, 42(5), 19.

Al-Jaifi, H. A., Al-rassas, A. H., & Al-Qadasi, A. A. (2017). Corporate governance strength and stock market liquidity in Malaysia. International Journal of Managerial Finance, 13(5), 19.

Al-Matari, E. M. (2019). Do characteristics of the board of directors and top executives have an effect on corporate performance among the financial sector? Evidence using stock. Corporate Governance: The International Journal of Business in Society, 20(1), 28.

Al-Rassas, A. H. (2015). Internal monitoring mechanisms and earnings quality: Empirical evidence from Malaysia. Universiti Utara Malaysia.

Alzeban, A. (2015). Influence of audit committees on internal audit conformance with internal audit standards. Managerial Auditing Journal, 30(6–7), 539–559.

Alzeban, A., & Gwilliam, D. (2014). Factors affecting the internal audit effectiveness: A survey of the Saudi public sector. Journal of International Accounting, Auditing and Taxation, 23(2), 74–86.

Alzeban, A., & Sawan, N. (2015). The impact of audit committee characteristics on the implementation of internal audit recommendations. Journal of International Accounting, Auditing and Taxation, 24, 61–71.

Arena, M., & Azzone, G. (2009). Identifying organizational drivers of internal audit effectiveness. International Journal of Auditing, 13(1), 43–60.

Azzam, S. (2006). Statistics in Education and SPSS. The Modern World of Books.

Bass, B. M. (1999). Two decades of research and development in transformational leadership. European Journal of Work and Organizational Psychology, 8(1), 9–32.

Burnaby, P. A., Abdolmohammadi, M. J., Hass, S., & Paape, L. (2007). A global summary of the common body of knowledge 2006. Institute of Internal Auditors Research Foundation.

Burns, J. M. (1978). Leadership, Harper & Row, New York, NY.

Bushman, R. M., & Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of Accounting and Economics, 32(1–3), 237–333.

Carcello, J. V, & Neal, T. L. (2000). Audit committee composition and auditor reporting. The Accounting Review, 75(4), 453–467.

Casida, J., & Parker, J. (2011). Staff nurse perceptions of nurse manager leadership styles and outcomes. Journal of Nursing Management, 19(4), 478–486.

CBY. (2013). Guidelines for Governance of Banks in the Republic of Yemen. In Central Bank of Yemen.

Chen, Y., Lin, B., Lu, L., & Zhou, G. (2020). Can internal audit functions improve firm operational efficiency? Evidence from China. Managerial Auditing Journal, 35(8), 1167–1188.

Chin, W. W. (1998). The partial least squares approach to structural equation modeling. Modern Methods for Business Research, 295(2), 295–336.

Cohen, A., & Sayag, G. (2010). The effectiveness of internal auditing: an empirical examination of its determinants in Israeli organisations. Australian Accounting Review, 20(3), 296–307.

Coram, P., Ferguson, C., & Moroney, R. (2008). Internal audit, alternative internal audit structures and the level of misappropriation of assets fraud. Accounting and Finance, 48(4), 543–559.

Crotty, M. J. (2009). The Foundation of Social Research. London: Sage.

Dal Mas, L. O., & Barac, K. (2018). The influence of the chief audit executive’s leadership style on factors related to internal audit effectiveness. Managerial Auditing Journal, 33(8/9), 29.

Davidson, R., Goodwin-Stewart, J., & Kent, P. (2005). Internal governance structures and earnings management. Accounting and Finance, 45(2), 241–267.

Dawes, J. (2008). Do data characteristics change according to the number of scale points used? An experiment using 5-point, 7-point and 10-point scales. International Journal of Market Research, 50(1), 61–104.

Dellai, H., & Omri, M. A. B. (2016). Factors affecting the internal audit effectiveness in Tunisian organizations. Research Journal of Finance and Accounting, 7(16), 208–221.

Drobetz, W., Schillhofer, A., & Zimmermann, H. (2003). Corporate governance and expected stock returns: empirical evidence from Germany. Springer-Verlag.

Drogalas, G., Anagnostopoulou, E., Koutoupis, A., & Pazarskis, M. (2018). Relationship between internal audit factors and corporate governance. Journal of Governance & Regulation, 7, Iss. 3, 13–17.

Drogalas, G., Karagiorgos, T., & Arabatzis, K. (2015). Factors associated with internal audit effectiveness: Evidence from Greece. Drogalas, G., Karagiorgos T. & Arampatzis K.(2015). Factors Associated with Internal Audit Effectiveness: Evidence from Greece. Journal of Accounting and Taxation, 7(7), 113–122.

Dvir, T., Eden, D., Avolio, B. J., & Shamir, B. (2002). Impact of transformational leadership on follower development and performance: A field experiment. Academy of Management Journal, 45(4), 735–744.

Eagly, A. H., Johannesen-Schmidt, M. C., & Van Engen, M. L. (2003). Transformational, transactional, and laissez-faire leadership styles: a meta-analysis comparing women and men. Psychological Bulletin, 129(4), 569.

Elghuweel, M. I., Ntim, C. G., Opong, K. K., & Avison, L. (2017). Corporate governance, Islamic governance and earnings management in Oman: A new empirical insights from a behavioural theoretical framework. Journal of Accounting in Emerging Economies, 7(2).

Endaya, K. A., & Hanefah, M. M. (2013). Internal audit effectiveness: An approach proposition to develop the theoretical framework. Research Journal of Finance and Accounting, 4(10), 92–102.

Endaya, K. A., & Hanefah, M. M. (2016). Internal auditor characteristics, internal audit effectiveness, and moderating effect of senior management. Journal of Economic and Administrative Sciences, 32(2), 160–176.

Erasmus, L., & Coetzee, P. (2018). Drivers of stakeholders’ view of internal audit effectiveness: Management versus audit committee. Managerial Auditing Journal, 33(1), 90–114.

Fadzil, F. H., Haron, H., & Jantan, M. (2005). Internal auditing practices and internal control system. Managerial Auditing Journal, 20(8), 844–866.

Fakhfakh, I., & Jarboui, A. (2021). Board of director’s effectiveness, audit quality and ownership structure: impact on audit risk-Tunisian evidence. Journal of Accounting in Emerging Economies, 12(3), 18.

Fernandes, C., Farinha, J., Martins, F. V., & Mateus, C. (2018). Bank governance and performance: a survey of the literature. Journal of Banking Regulation, 19(3), 236–256.

Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error: Algebra and statistics. Sage Publications Sage CA: Los Angeles, CA.

Gebrayel, E., Jarrar, H., Salloum, C., & Lefebvre, Q. (2018). Effective association between audit committees and the internal audit function and its impact on financial reporting quality: Empirical evidence from Omani listed firms. International Journal of Auditing, 22(2), 197–213.

Gramling, A. A., Maletta, M. J., Schneider, A., & Church, B. K. (2004). The role of the internal audit function in corporate governance: A synthesis of the extant internal auditing literature and directions for future research. Journal of Accounting Literature, 23, 194.

Hair, J., Hollingsworth, C. L., Randolph, A. B., & Chong, A. Y. L. (2017). An updated and expanded assessment of PLS-SEM in information systems research. Industrial Management & Data Systems.

Hair, J F, Black, W. C., Babin, A., & Anderson, R. E. (2010). RE and Tatham, RL (2006), multivariate data analysis. Upper Saddle River, NJ: Pearson Prentice Hall.

Hair, Joseph F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2014). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (2nd ed.). Thousand Oaks: SAGE.

Hair, Joseph F, Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. In European business review. Emerald Publishing Limited.

Hargis, M. B., Watt, J. D., & Piotrowski, C. (2011). Developing leaders: Examining the role of transactional and transformational leadership across business contexts. Organization Development Journal, 29(3), 51.

Hayes, A. F. (2012). PROCESS: A versatile computational tool for observed variable mediation, moderation, and conditional process modeling. University of Kansas, KS.

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135.

Hillman, A. J., Shropshire, C., Certo, S. T., Dalton, D. R., & Dalton, C. M. (2011). What I like about you: A multilevel study of shareholder discontent with director monitoring. Organization Science, 22(3), 675–687.

Hoos, F., Kochetova‐Kozloski, N., & d’Arcy, A. C. (2015). The Importance of the C hief A udit E xecutive’s Communication: Experimental Evidence on Internal Auditors’ Judgments in a ‘Two Masters Setting.’ International Journal of Auditing, 19(3), 166–181.

Hung, D., & Tuan, T. (2019). Factors affecting the effectiveness of internal control in joint stock commercial banks in Vietnam. Management Science Letters, 9(11), 1799–1812.

Ilker, E. (2016). Comparison of convenience sampling and purposive sampling comparison of convenience sampling and purposive sampling.(February).

Islam, M. S., Farah, N., & Stafford, T. F. (2018). Factors associated with security/cybersecurity audit by internal audit function: An international study. Managerial Auditing Journal, 33(4), 33.

Ismael, H. R., & Roberts, C. (2018). Factors affecting the voluntary use of internal audit: evidence from the UK. Managerial Auditing Journal, 33(3), 288–317.

Ittonen, K., Miettinen, J., & Vähämaa, S. (2010). Does female representation on audit committees affect audit fees? Quarterly Journal of Finance and Accounting, 49(3/4), 113–139.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.

Jing, F. F., & Avery, G. C. (2008). Missing links in understanding the relationship between leadership and organizational performance. International Business & Economics Research Journal (IBER), 7(5).

Johnson, O. (1992). Business judgment v. audit judgment: Why the legal distinction? Accounting, Organizations and Society, 17(3), 205–222.

Judge, T. A., & Piccolo, R. F. (2004). Transformational and transactional leadership: a meta-analytic test of their relative validity. Journal of Applied Psychology, 89(5), 755.

Kaawaase, T. K., Nairuba, C., Akankunda, B., & Bananuka, J. (2021). Corporate governance, internal audit quality and financial reporting quality of financial institutions. Asian Journal of Accounting Research.

Karagiorgos, T., Drogalas, G., Gotzamanis, E., & Tampakoudis, I. (2010). Internal Auditing As an Effective Tool for Corporate Governance. Journal of Business Management, 2(1), 15–23.

Kassem, R. (2022). Elucidating corporate governance’s impact and role in countering fraud. Corporate Governance: The International Journal of Business in Society, ahead-of-print.

Krosnick, J. A., & Fabrigar, L. R. (1997). Designing rating scales for effective measurement in surveys. Survey Measurement and Process Quality, 141–164.

Lenz, R. (2013). Insights into the effectiveness of internal audit: a multi-method and multi-perspective study. Available at SSRN 2541580.

Lenz, R., & Hahn, U. (2015). A synthesis of empirical internal audit effectiveness literature pointing to new research opportunities. Managerial Auditing Journal, 30(1), 5–33.

Lin, S., Pizzini, M., Vargus, M., & Bardhan, I. R. (2011). The role of the internal audit function in the disclosure of material weaknesses. The Accounting Review, 86(1), 287–323.

Madawaki, A., & Ahmi, A. (2021). Internal audit functions, financial reporting quality and moderating effect of senior management support. Meditari Accountancy Research, 34(4), 458–481.

Martino, P., D’Onza, G., & Melville, R. (2021). The Relationship Between CAE Leadership and the IAF’s Involvement in Corporate Governance. Journal of Accounting, Auditing & Finance, 36(2), 430–448.

Mihret, D. G., & Grant, B. (2017). The role of internal auditing in corporate governance: a Foucauldian analysis. Accounting, Auditing and Accountability Journal, 30(3), 699–719.

Mihret, D. G., & Yismaw, A. W. (2007). Internal audit effectiveness: an Ethiopian public sector case study. Managerial Auditing Journal.

Muda, I., & Dharsuky, A. (2015). Impact Of Region Financial Information System (SIKD) Quality, Role Ambiguity And Training on Precision of Financial Statement of Local Government Presentation In North Sumatra. International Journal of Applied Business and Economic Research, 13(6), 4283–4304.

Muda, I., Maulana, W., Sakti Siregar, H., & Indra, N. (2018). The Analysis of Effects of Good Corporate Governance on Earnings Management in Indonesia with Panel Data Approach. Iranian Economic Review, 22(2), 599–625.

Oino, I. (2019). Do disclosure and transparency affect bank’s financial performance? Corporate Governance: The International Journal of Business in Society.

Onumah, J. M., & Krah, R. Y. (2012). Barriers and catalysts to effective internal audit in the Ghanaian public sector. Accounting in Africa, 12(1), 177–207.

Oussii, A. A., & Boulila Taktak, N. (2018). The impact of internal audit function characteristics on internal control quality. Managerial Auditing Journal, 33(5), 450–469.

Pickett, S. K. H. (2011). The Essential Guide to Internal Auditing. 2nd Edition. United Kingdom: John Wiley and Sons Ltd.

Raghunandan, K., Rama, D. V, & Read, W. J. (2001). Audit committee composition,“gray directors,” and interaction with internal auditing. Accounting Horizons, 15(2), 105–118.

Ramayah, T., Yeap, J. A. L., Ahmad, N. H., Halim, H. A., & Rahman, S. A. (2017). Testing a confirmatory model of Facebook usage in SmartPLS using consistent PLS. International Journal of Business and Innovation, 3(2), 1–14.

Sarens, G., & Abdolmohammadi, M. J. (2011). Monitoring effects of the internal audit function: agency theory versus other explanatory variables. International Journal of Auditing, 15(1), 1–20.

Sarens, G., Abdolmohammadi, M. J., & Lenz, R. (2012). Factors associated with the internal audit function’s role in corporate governance. Journal of Applied Accounting Research, 13(2), 191–204.

Sarens, G., Beelde, I. De, & Everaert, P. (2009). Internal audit: A comfort provider to the audit committee. The British Accounting Review, 41(2), 90–106.

Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach. John Wiley & Sons.

Sharma, V. D., Sharma, D. S., & Ananthanarayanan, U. (2011). Client importance and earnings management: The moderating role of audit committees. Auditing: A Journal of Practice & Theory, 30(3), 125–156.

Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737–783.

Soh, D. S. B., & Martinov-Bennie, N. (2011). The internal audit function: Perceptions of internal audit roles, effectiveness and evaluation. Managerial Auditing Journal, 26(7), 605–622.

Soliman, M. M., & Ragab, A. A. (2014). Audit committee effectiveness, audit quality and earnings management: an empirical study of the listed companies in Egypt. Research Journal of Finance and Accounting, 5(2), 155–166.

Sun, W., Chou, C.-P., Stacy, A. W., Ma, H., Unger, J., & Gallaher, P. (2007). SAS and SPSS macros to calculate standardized Cronbach’s alpha using the upper bound of the phi coefficient for dichotomous items. Behavior Research Methods, 39(1), 71–81.

Vadasi, C., Bekiaris, M., & Andrikopoulos, A. (2019). Corporate governance and internal audit: an institutional theory perspective. Corporate Governance: The International Journal of Business in Society.

Van Peursem, K. (2004). Internal auditors’ role and authority: New Zealand evidence. Managerial Auditing Journal, 19(3), 378–393.

Wang, G., Oh, I.-S., Courtright, S. H., & Colbert, A. E. (2011). Transformational leadership and performance across criteria and levels: A meta-analytic review of 25 years of research. Group & Organization Management, 36(2), 223–270.

Wilson, I. (2006). Regulatory and institutional challenges of corporate governance in post banking consolidation Nigeria. Economic and Policy Review, 12(2), 55–63.

Xie, B., Davidson III, W. N., & DaDalt, P. J. (2003). Earnings management and corporate governance: the role of the board and the audit committee. Journal of Corporate Finance, 9(3), 295–316.

Yang, Z., & Wang, C. L. (2011). Guanxi as a governance mechanism in business markets: Its characteristics, relevant theories, and future research directions. Industrial Marketing Management, 40(4), 492–495.

Yee, C. S. L., Sujan, A., James, K., & Leung, J. K. S. (2008). Perceptions of Singaporean internal audit customers regarding the role and effectiveness of internal audit. Asian Journal of Business and Accounting, 1(2), 147–174.

Zeng, H., Yang, L., & Shi, J. (2020). Does the supervisory ability of internal audit executives affect the occurrence of corporate fraud? Evidence from small and medium-sized listed enterprises in China. International Journal of Accounting & Information Management, 29(1), 26.

How to Cite
Abdulrahman Mohammed Al-yazidi, Abdullah, M. F., & Adeeb A. Alhebry. (2022). The Impact of Chief Audit Executive’s Leadership Style and Senior Management Support for Internal Audit Function on Corporate Governance Effectiveness with the Moderating Effect of Audit Committee Characteristics: Evidence from Yemen. The Journal of Management Theory and Practice (JMTP), 3(2), 65-75.
Marketing & Management