Evaluating the effect of investor culture on internal control reporting and investor perceptions of disclosure credibility

Abstract

Investors expect internal control reports to improve disclosed information credibility by demonstrating effective risk management, compliance, and transparency. Investment culture influences these expectations by shaping risk perception, emphasizing long-term stability, and setting standards for corporate governance. Thus, investment culture emphasizes robust internal control to enable a more thorough evaluation of investment opportunities. This study examines the relationship between internal control reporting and investor perception of disclosure credibility mediated by investor culture. The survey approach involved 166 respondents from 57 Jordanian brokerage firms. The partial least squares (PLS) method was used for analysis. The results showed that investor perception of disclosure credibility was influenced by internal control reporting as PV 0.000 and that investor culture positively mediated between the two variables as PV 0.000. Investors thus rely on internal control reporting to ensure the credibility of disclosure and aid their investment decisions. This study provides foundational knowledge to policymakers to design successful internal control reporting policies and support systems. Acknowledgment I’m indebted to the University of Tabuk – KSA for the support of this article.

Keywords

• corporate governance
• credibility enhancement
• disclosure credibility
• financial information
• internal control reporting
• investment decisions