Introduction
The key purpose of this paper is to investigate the relationship between corporate governance mechanisms and the fraudulent financial statements or misappropriation of assets through an in-depth analysis of the existing studies on the relevant field. To carry out this investigation, ten prominent peer-reviewed articles have been precisely summarised. The summaries include a succinct analysis of the relevant research problems, research questions, and results and implications of the conducted studies.
Article 1
In his article ‘Corporate governance and financial reporting in the Nigerian banking sector: an empirical study’ Imeokparia (2013) broadly analyses the relationship between corporate governance mechanisms and the fraudulent financial statements or misappropriation of assets – the research problem, research questions, results, and implications of his study have been summarised in the following table:
Article 2
In ‘The role of corporate governance in fraud reduction – a perception study in the Saudi Arabia business environment’, In’airat (2015) pointed out the significance and the effectiveness of corporate governance in controlling fraudulent financial statements and reducing misappropriation of assets:
Article 3
‘Corporate governance and the financial reporting process’ is another great article that explains the relationship between corporate governance systems and the misleading financial statements or frauds relating to assets:
Article 4
In their article ‘Corporate governance consequences of accounting scandals: evidence from top management, CFO and auditor turnover’, Agrawal and Cooper (2016) focused on the deep-rooted problems of conflicts of interest between the top-level employees of the businesses and the ordinary shareholders by explaining why the managers and executive-directors generate misleading financial statements, whilst the shareholders crave for appropriate disclosures:
Article 5
In the ‘Effective corporate governance and financial reporting in Japan’, Rahman and Bremer (2016) put forward the following analysis:
Article 6
In ‘the influence of corporate governance on corporate performance among manufacturing firms in Kenya: a theoretical model’, Wagana and Karanja (2015) examines the relationship between corporate governance mechanisms and corporate performance (in terms of misappropriation of assets) of the manufacturing firms in Kenya:
Article 7
In ‘Detecting asset misappropriation: a framework for external auditors’, Kassem (2014) provided the following:
Article 8
Kehinde (2015) in ‘Asset protection and financial statement fraud: the audit and management function in Nigeria business organization’ discussed the following:
Article 9
According to Eyisi and Agbaeze (2014) in ‘The impact of forensic auditors in corporate governance’:
Article 10
In ‘The role of auditing in the management of corporate fraud’, Omoteso and Obalola (2014) assessed the following:
Conclusion
There is a direct relationship between corporate governance mechanisms and fraudulent financial statements or misappropriation of assets, and the reinforcement of the governance codes can significantly diminish such frauds.
References
Agrawal, A. & Cooper, T. (2016). Corporate governance consequences of accounting scandals: evidence from top management, CFO and auditor turnover. Quarterly Journal of Finance, 7(1), 1-47.
Eyisi, A. S. & Agbaeze, E. K. (2014). The impact of forensic auditors in corporate governance. International Journal of Development and Sustainability, 3(2), 404-417.
Imeokparia, L. (2013). Corporate governance and financial reporting in the Nigerian banking sector: an empirical study. Asian Economic and Financial Review, 3(8), 1083-1095.
In’airat, M. (2015). The role of corporate governance in fraud reduction – a perception study in the Saudi Arabia business environment. Journal of Accounting and Finance, 15(2), 119-128.
Kassem, R. (2014). Detecting asset misappropriation: a framework for external auditors. International Journal of Accounting, Auditing and Performance Evaluation, 10(1), 1-42.
Kehinde, J. S. (2015). Asset protection and financial statement fraud: the audit and management function in Nigeria business organisation. Journal of Policy and Development Studies, 9(3), 166-175.
Matiş, D., Mănoiu, S. M., & Bonaci, C. G. (2012). Corporate governance and the financial reporting process. Annales Universitatis Apulensis Series Oeconomica, 14(2), 415-426.
Omoteso, K. & Obalola, M. (2014). The role of auditing in the management of corporate fraud. Emerald Group Publishing Limited, 6(1), 129-151.
Rahman, K. M. & Bremer, M. (2016). Effective corporate governance and financial reporting in Japan. Asian Academy of Management Journal of Accounting and Finance, 12(1), 93-122.
Wagana, D. & Karanja, K. (2015). The influence of corporate governance on corporate performance among manufacturing firms in Kenya: a theoretical model. International Journal of Academic Research in Business and Social Sciences, 5(4), 258-272.