Corporate governance and internal audit: an institutional theory perspective Christina Vadasi, Michalis Bekiaris and Andreas Andrikopoulos Abstract Purpose – This paper aims to explore internal audit effectiveness through its contribution to corporate governance. Namely, the authors attempt to investigate the impact of internal audit professionalization on internal audit’s contribution to corporate governance. Design/methodology/approach – Using a research framework informed by institutional theory, the authors predict that internal audit’s contribution to corporate governance is associated with factors related to internal audit professionalization. To investigate the arguments, the authors combine data from a survey of 49 listed companies in the Athens Stock Exchange with publicly available information from annual reports. Findings – Empirical results indicate that internal audit professionalization affects internal audit effectiveness, as internal audit’s contribution to corporate governance is improved for organizations where internal audit function complies with internal auditing standards and internal auditors hold professional certifications. The findings also suggest that internal audit’s contribution to corporate governance is shaped by some company-specific characteristics, namely, CEO duality and audit committee quality. Practical implications – The results have implications for internal auditors who wish to increase the efficiency of their work, corporate governance mechanisms such as the board of directors and the audit committee, which can use the findings of this study to better respond to their responsibilities concerning internal audit and regulators who can also benefit to strengthen areas with substantial impact on internal audit’s contribution to corporate governance. Originality/value – This paper contributes to the academic discussion on the role of internal audit in corporate governance and complements the work of other researchers in the field of internal audit professionalization. This study tries to fill a gap in the literature on the effect of internal audit professionalization elements on internal audit’s contribution to corporate governance. Keywords Greece, Professionalization, Internal auditing, Institutional theory, Corporate Governance, Institute of Internal Auditors, Internal audit Paper type Research paper 1. Introduction Internal audit (IA) is a fundamental part of corporate governance (CG), as it is one out of four key players of CG along with the audit committee, external audit and management (Gramling et al., 2004;(Goodwin-Steward and Kent, 2006). IA’s importance in corporate governance relies on its role as the only internal monitoring mechanism that operates on a daily basis (Prawitt et al., 2009; Soh and Martinov-Bennie, 2011). Nevertheless, prior research on IA effectiveness and its association with CG has been rather limited (Sarens, 2009; Mihret and Grant, 2017; Lenz et al., 2018). Our objective is to explore the effect of internal audit function (IAF) on IA effectiveness through the lens of institutional theory, which has been attracting increasing attention in the IA literature (Al-Twaijry et al., 2003; Arena et al., 2006; Arena and Azzone,2007; Mihret et al.,2010). Namely, we use normative isomorphism (one of three types of isomorphism in institutional theory) to assess the effect of IA professionalization on IA’s contribution to CG. The guidance of the Institute of Internal Christina Vadasi, Michalis Bekiaris and Andreas Andrikopoulos all are based at Department of Business Administration, University of the Aegean, Chios, Greece. Received 19 July 2019 Revised 18 September 2019 20 September 2019 Accepted 22 September 2019 DOI 10.1108/CG-07-2019-0215 © Emerald Publishing Limited, ISSN 1472-0701 j CORPORATE GOVERNANCE j