Evaluating Corporate Governance Fraud: A Case of National Spot Exchange Limited (original) (raw)

Corporate Governance and Fraud: Evolution and Considerations

Intechopen, 2017

There are many definitions of Corporate Governance, as a structure, as process, as policies , as mechanisms, but despite their differences of focus, they mainly addressed the sustainable economic growth and protection of shareholders and other stakeholder's rights. The purpose here is to present the evolution of the main principles and frameworks as corporate and financial environment changes and set new challenges. Some important scandals that revealed the weaknesses of corporate governance frameworks are described to complement the comprehension of the object of it. It is detached the aspects simulated or ignored and the subsequent enforcement and monitoring response. Discussion about the new challenges, what corporate governance is supposed to provide and what it can promote, closes this chapter.

The Role of the Firms Governance Bodies in the Fight against Fraud- Case of the Board of Directors

Following the recent financial scandals that have dominated the international scene (Enron, Parmalat, Worldcom, Madoff ...) due mainly to cases of fraud and breach of confidence, the attention given to mechanisms against these practices is increasingly growing. Indeed, to minimize conflicts of interest and potential fraud risk, the shareholders put in place various mechanisms of corporate governance (internal and external) to reduce managerial discretion and the potential for behavior deviant. Among this array of means of control, the agency theory considers the board of directors as the most appropriate mechanism to discipline management and force managers to act in the interests of shareholders. This article deals with the theme and highlights the role of governing bodies, in particular the board of directors, in the fight against fraud, through, on one side, the audit committee and ethics to convey within organizations, and on the other hand, the use of external audit and the participation in the construction of legal system of investor protection as a means of limiting the possibilities of accounting manipulation of leaders, to regulate conflicts and reduce the information asymmetry between principal and agent. In other words, recourse to an independent external auditor can be considered as a mechanism encouraging or forcing the individual or individuals, to whom Responsibility has been delegated, to act in the interests of the organization partners.

The Implication of Political Governance in Preventing Fraud of Indonesian SOEs

Objective-This study examines one of the political governance pillars, namely the Party's cadre management system, on fraud in Indonesian SOEs. In the context of Indonesia, SOEs' executives are not officially the cadre of the Party, but some of them have a political connection to the ruling Party. We use BOC's Duality and BOCs political connection as proxies of the Party's cadre management system due to their potential affiliation to the ruling Party. Methodology/Technique-This study used 86 observations of SOEs listed on the Indonesia Stock Exchange during 2015-2019. Using panel data estimation, this study surprisingly finds that BOC's Duality has a negative effect on fraudulent financial statements. Findings-The political connection positively affects the fraudulent financial statement. These findings suggest that independent boards with dual positions are incentivized to maintain their reputation, thereby decreasing fraudulent financial statements. Novelty-However, independent boards with political connections cannot overcome their conflicts of interest, so they cannot properly carry out their supervisory functions. These findings become the main contribution of this study that explains the implication of political governance in preventing fraud in Indonesian SOEs.

The corporate governance mechanism and its role in the reduction of financial and administrative corruption

International Journal of Scientific and Research Publications (IJSRP), 2018

The emerging phenomenon of administrative and financial corruption is considered as one of the most serious and pressing issues facing a host of countries, including in particular developing countries. In fact, this has led to a recession in the process of economic development and growth, especially with the resulting destruction of the economy and the financial and administrative potential of the state and equally of institutions. The continuous financial crunches and scandals which affected the largest companies in the world, especially those listed in the capital markets have proved the failure of traditional methods to avert the causes of those mishaps. This in fact prompted the concerned authorities at the national and international levels to conduct in-depth studies to determine the main reasons leading to these financial crises and complications, which were significantly associated with the accounting and financial aspects. Governance is considered as the most important mechanism in addressing the phenomenon of financial and administrative corruption, and is carried out in the form of a variety of mechanisms, notably transparency and disclosure of financial and nonfinancial information that are prepared in accordance with accounting standards, as well as strengthening the role of the internal and external auditing, especially with respect to the independence of these two functions 1 .

International Journal of Commerce and Management Research Corporate Governance: Issues, Opportunities and Challenges

In today's globalised world, corporations need to access global pools of capital and to attract and retain the best human capital from various parts of the world. Under such a scenario, unless a corporation embraces and demonstrates ethical conduct, it will not be able to succeed. Ever since India's biggest-ever corporate fraud and governance failure unearthed at Satyam Computer Services Limited, the concerns about good Corporate Governance have increased phenomenally. The rapidly increasing economic growth that corporate India witnessed the high profile governance failure scams since the 1990s brought to the forefront the need for Indian companies to adopt corporate governance practices and standards, which are consistent with international principles and standards. A number of studies in India and abroad have indicated that markets and investors take notice of well managed companies and respond positively to them. The Corporate Governance issue has emerged primarily because of the growing importance of corporations in the national economies and their interaction with the international agencies and institutions. This form of management is also designed to limit risk and eliminate corrosive elements within an organization with haste. Hence, it imperative for a corporation to be fair and transparent to all its stakeholders in all its transactions by adhering to the best corporate governance practices.

The Impact of Strengthening the Judicial Accountability of Corporate Governance in Order to Combat Corruption in the Companies Listed in the Financial Markets

International Business Research, 2014

The aim of this study is to discuss and analyse the reasons for the collapse of one of the huge energy companies (Enron), which resulted in its collapse to the collapse of the largest auditing firm in the world (Arthur Andersen) to prove their involvement in manipulations of finance which was Enron, and then see recent changes to the corporate governance because of those collapses, and the views of the surrounding environment in the United States, the possibility of the application of those changes on the ground. The study concludes that: both collapse of Enron, and Arthur Andersen are due to specialised ethics, Arthur Andersen did double job to Enron, and which was a clear violation to the rules, The financial market authorities was responsible to those collapses due to shortage of control, most of the companies and auditors face difficulties in applying new rules of corporate governance, and main problem arise in ethics not in the rules controlling corporate governance.

Relationships between Corporate Governance and Fraud in U.S. Listed Companies

Corporations should have strong capital to sustain their operations. Investors should feel safe and be able to have access to accurate information about firms to invest their capital in those firms. These two factors are vital issues for the sustainability of corporations in the 21st century business. With the proper establishment of corporate governance practices, investors will be protected and feel safe and then a trust will develop, capital inflow will be facilitated and ultimately corporations with stronger financial foundations will emerge. A questionnaire was applied in this study to investigate the relationships between the corporate governance and perceived financial performance of the top 100 manufacturing firms operating in the Kayseri Organized Industrial Region. The results revealed that the number of employees had significant effects on the corporate governance and perceived financial performance scores of the firms and institutionalization level also affected perceived financial performance. The other independent variables (sectoral distribution, firm age, and export/revenue ratio) did not have any significant effects on corporate governance and perceived financial performance scores of the firms.

Corporate Governance Attributes in Fraud Detterence

International Journal of Financial Research

The failures of corporations such as Enron, WorldCom and HIH Insurance, to name but a few, have heightened investor awareness of the need to not only evaluate company performance, but also to consider the possibility that financial statements may not be a true reflection of company results, as fraudulent activities may have occurred during the reporting period. Since parties who are outside of the firm do not have access to pertinent information, they have to rely upon published financial and non-financial data to form an opinion regarding performance and/or the risk that fraudulent activities may have occurred. The prior literature shows a relationship between weak corporate governance and fraudulent activities, although most if not all of this research relates to Western economies. The differences in institutional setting e.g. cultural values and legal environment in Malaysia would not give the same findings with the study in western economies. Composing of many ethnicities, Malay...

IMPACT OF CORPORATE GOVERNANCE REGULATION IN DEVELOPING COUNTRIES STOCK EXCHANGE: A CASE STUDY OF THE NIGERIAN STOCK EXCHANGE

This study examined the impact of corporate governance regulations in developing countries Stock Exchange using Nigerian Stock Exchange as a case study. The paper highlighted the fact that even though most companies prepare an excellent annual report and accounts, still, if they have a weak system of corporate governance systems in their organisation, the probability of the enterprise going under is high. Many countries around the world have made efforts to forestall corporations operating within their economy collapsing by constituting various bodies and committees to fashion out the best corporate governance principles to adopt, which would be in tandem with their peculiar socioeconomic makeup. In Nigeria, the Securities and Exchange Commission (SEC) in collaboration with the Corporate Affairs Commission was mandated to identify weaknesses in the current corporate governance practices. Finding from this study suggest that the Nigerian Stock Exchange has carried out their regulatory functions. While this is so, the management of the NSE must ensure that it has an arrangement for continual training of its supervisors to get them to gully knowledgeable about modern trends and new technologies to aid them efficiently discharge their duties.