A QCA Approach to Exploring Internal and External Governance Configurations in USA

Abstract

This study investigates the determinants of financial reporting quality (FRQ) with a specific focus on the interplay between internal controls, audit committee effectiveness, external audit quality, ownership concentration, and regulatory oversight. Drawing on firm-level data and multivariate estimation techniques, the analysis reveals that none of these governance mechanisms, when considered individually, exhibit a statistically significant effect on FRQ. The findings suggest that improvements in FRQ are unlikely to stem from isolated governance practices and may instead require integrated, system-based configurations that reflect the complex realities of corporate control environments. These results contribute to a growing body of literature advocating for configurational approaches in corporate governance research and practice. The study offers policy recommendations for regulators, boards, and international bodies to adopt holistic frameworks that align internal and external governance mechanisms. Furthermore, the paper underscores the need for future research applying qualitative comparative analysis (QCA) or other configurational methodologies to better identify effective governance combinations that promote high-quality financial reporting in diverse institutional settings.