Monitoring of Corporate Governance Code in Argentina: The Control Environment Dimension

Abstract

Two main conceptual frameworks sustain the study of the implementation of corporate governance codes (CGCs) by companies: the efficiency approach (encompassing agency theory, signaling, and stakeholder view) and institutional theory. The aim is to analyze the practices in the control environment dimension as reported in the CGC for those companies randomly monitored by the National Securities Commission (NSC) in Argentina. Firstly, the application of practices related to internal and external auditing is examined. Subsequently, the changes introduced in this dimension since the initial implementation of control in 2020 are identified.
A qualitative study based on document analysis is conducted, taking as case studies the eight randomly selected companies in 2020 whose CGC reporting was subject to three consecutive years of monitoring by the NSC. We use the content analysis technique, identifying five categories of analysis: i) integrated risk management system, ii) internal audit, iii) annual risk-based audit plan, iv) audit committee, and v) selection and monitoring policy for external auditors.
The results reveal high heterogeneity in the application of practices, irrespective of the type of issuer. The temporal evolution of disclosed information shows partial improvement in quality, as even after the monitoring period, there are still practices that are not reported and explanations lacking informative content.