The Internal Control in Corporate Governance

Salvatore Esposito De Falco ()
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Salvatore Esposito De Falco: Sapienza University of Rome

Chapter Chapter 12 in Corporate Governance, 2024, pp 389-407 from Springer

Abstract: Abstract This chapter examines the role of internal control within corporate governance systems. It highlights the importance of control activities for effective management and long-term corporate sustainability, noting the influence of European directives and international best practices. Internal control is divided into two perspectives: internal, which ensures effective interactions within the company, and external, which monitors compliance with regulations. The chapter examines the allocation of control rights among stakeholders, emphasizing the need to protect both shareholders and external parties. Internal control actors include the board of directors, independent directors, various committees, and the audit committee. The chapter highlights the importance of independent directors in mitigating conflicts of interest and ensuring transparency. The Parmalat case is discussed as a notable example of governance failure due to information asymmetry and lack of effective oversight, leading to fraudulent activities.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-74089-3_12

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DOI: 10.1007/978-3-031-74089-3_12

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