Corporate governance and financial accountability: a legal-accounting perspective
DOI:
https://doi.org/10.64171/JAES.3.1.127-138Keywords:
Corporate Governance, Financial Accountability, Legal Frameworks, Accounting Standards, Sarbanes-Oxley Act, Companies Act 2013, Enron Scandal, Satyam Scandal, ESG, Auditing, Stakeholder TheoryAbstract
This research paper provides a comprehensive analysis of the legal and accounting dimensions of corporate governance and financial accountability. It argues that these two concepts are inextricably linked, with strong governance serving as the indispensable framework for ensuring transparent and accurate financial reporting. The paper traces the historical evolution of this relationship, demonstrating how major corporate crises, such as the Enron and Satyam scandals, have repeatedly acted as catalysts for legislative and regulatory reform. It examines the foundational theories of corporate governance—agency, stewardship, and stakeholder theories—and analyzes the institutional mechanisms, including the board of directors, the audit committee, and the external auditor, that enforce these principles. Furthermore, the paper explores emerging trends and future challenges, such as the integration of ESG factors and the dual impact of digitalization, and discusses the ongoing legal and ethical challenges they pose. The analysis highlights that for genuine corporate integrity and market trust to exist, the legal system, the accounting profession, and corporate leaders must function in a coordinated and vigilant manner.
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