Beyond Sarbanes-Oxley: Determinants of internal control quality in a civil law emerging market

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Abstract

This study examines the principal determinants of internal control quality (ICQ) in Egyptian non-financial listed firms, focusing on corporate governance attributes and firm-specific characteristics. ICQ is measured using survey responses from external auditors for the period 2013–2016, based on a balanced panel dataset of 236 firms listed on the Egyptian Stock Exchange (EGX). The findings indicate that board independence is positively and significantly associated with ICQ under a combined leadership structure, but exhibits a negative association under a separated structure. Ownership dispersion significantly enhances ICQ when leadership roles are separated, but becomes insignificant under a combined structure, suggesting that leadership concentration may empower block holders over minority shareholders, potentially weakening ICQ. Regarding leverage, the association with ICQ is positive under combined leadership and negative under a separated structure, indicating that concentrated leadership may strengthen creditor monitoring in highly leveraged firms, thereby improving ICQ. Overall, the results demonstrate that the effects of corporate governance and firm-level characteristics on ICQ are contingent upon the company’s leadership structure. This study contributes to the accounting literature by providing evidence from an emerging civil law environment and by extending the analysis of Chen et al. (2017), originally conducted in the United States. The findings offer policy implications for Egyptian regulators regarding internal control disclosure requirements and challenge the conventional view that combined leadership necessarily undermines transparency in emerging economies.

Keywords: Internal Control Quality, Corporate Governance Characteristics, Firm Specific Characteristics, Egypt

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: D22, G1, G2, G32, G34, M10, M12, M14

Received: 22.12.2025
Revised: 18.02.2026; 02.03.2026
Accepted: 20.03.2026
Published online: 24.03.2026

How to cite this paper: Samaha, K. (2026). Beyond Sarbanes-Oxley: Determinants of internal control quality in a civil law emerging market. Corporate Ownership & Control, 23(1), 102–109. https://doi.org/10.22495/cocv23i1art10