The Influence of Board Characteristics towards the Effectiveness of Whistleblowing Policy: An Internal Auditors’ Perceptions
The existence of whistleblowing policy is important as a primary internal control mechanism to deter corporate malpractices. However, most studies on whistleblowing policy have largely focused only on the level of policy disclosure. This study, however, provides an understanding on the elements that make the policy effective and how do the characteristics of board of directors influence the policy’s effectiveness. The respondents of this study are 65 in-house internal auditors in Malaysia. This study found that elements of communication and reporting channels, complaint recipient, accessibility, protection for whistleblowers, eligible users of the policy and investigations for the reported wrongdoings are important elements for an effective whistleblowing policy. The study also found that board independence is significantly associated with the effectiveness of whistleblowing policy as opposed to board size, audit committee, board financial expertise and board gender diversity that did not have significant relationships with the policy’s effectiveness.