Abstract:

Corporate scandals in the 2000s have reminded us again how important the effectiveness of internal control systems is for company stakeholders. The internal control system is recognized as one of the most important mechanisms for preventing both employee and executive cheating. It is believed that the effectiveness of the internal control system will reduce expenses to the extent that they prevent misatkes and cheats, which will positively affect the profitability of the company and the value of the company. Therefore, the aim of the study was to determine whether the effectiveness of internal control systems actually affects company profitability and company value. The study was conducted on companies in the BIST (XKURY) Corporate Governance Index in Turkey. In the study, correlation and regression analysis methods were used to measure the mentioned effectiveness. As a result of the research, it was revealed that there is a linear relationship between the internal control system and financial performance, and that the internal control system positively affects the financial performance of companies. In addition, in this effect mentioned, it was found that the share of control activities and monitoring elements from the elements of the internal control system was high.

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