An empirical analysis of the relation between corporate governance characteristics and the prevention of financial statement fraud Online publication date: Mon, 19-Nov-2018
by Nouha Khoufi; Walid Khoufi
International Journal of Management and Enterprise Development (IJMED), Vol. 17, No. 4, 2018
Abstract: Currently, fraud has become a real phenomenon, and insurance companies are making efforts to identify and implement effective means of fraud prevention. The paper aims to investigate whether corporate governance structure may have favoured the reducing of financial irregularities. It proposes modelling the relation between certain governance characteristics and financial statement fraud regarding French listed firms during the period 2009-2013. The research design of this study involves logit cross-sectional regression analysis of 25 fraud firms and 25 no-fraud firms. The study shows that the inclusion of outside members on the board of director increases the board's effectiveness at monitoring management for the prevention of financial statement fraud. The finding will contribute to enhance the existing corporate governance policy in France to foster the achievement of zero financial statement fraud.
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