Financial Scandals and the Role of Private Enforcement: The Parmalat Case

2005 ◽  
Author(s):  
Guido Alessandro Ferrarini ◽  
Paolo Giudici
Keyword(s):  
Private Enforcement ◽  
Financial Scandals

Fintech in financial reporting and audit for fraud prevention and safeguarding equity investments

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Paulina Roszkowska
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Financial Statement ◽  
Financial Fraud ◽  
Financial Statement Fraud ◽  
Content Type ◽  
Financial Scandals ◽  
External Auditor ◽  
Equity Investments

Purpose The purpose of this paper is to explore the audit-related causes of financial scandals and advice on how emerging technologies can provide solutions thereto. Specifically, this study seeks to look at the facilitators of financial statement fraud and explain specific fintech advancements that contribute to financial information reliability for equity investments. Design/methodology/approach The study uses the case studies of Enron and Arthur Andersen to document the evidence of audit-related issues in historical financial scandals. Then, a comprehensive and interdisciplinary literature review at the intersection of business, accounting and engineering, provides a foundation to propose technology advancements that can solve identified problems in accounting and auditing. Findings The findings show that blockchain, internet of things, smart contracts and artificial intelligence solutions have different functionality and can effectively solve various financial reporting and audit-related problems. Jointly, they have a strong potential to enhance the reliability of the information in financial statements and generally change how companies operate. Practical implications The proposed and explained technology advancements should be of interest to all publicly listed companies and investors, as they can help safeguard equity investments, thus build investors’ trust towards the company. Social implications Aside from implications for capital markets participants, the study findings can materially benefit various stakeholder groups, the broader company environment and the economy. Originality/value This is the first paper that seeks solutions to financial fraud and audit-related financial scandals in technology and not in implementing yet another regulation. Given the recent technology advancements, the study findings provide insights into how the role of an external auditor might evolve in the future.

scholarly journals Financial Fraud and Managers, Causes and Effects

2020 ◽  
Author(s):  
Mohamed Bechir Chenguel
Keyword(s):  
Psychopathic Personality ◽  
Financial Fraud ◽  
Financial Scandals ◽  
Organizational Framework ◽  
Financial Issues

The financial scandals which have appeared in recent times have placed fraud at the heart of economic and financial issues. Fraud by executives has disastrous consequences as it results in huge losses for investors and creditors, and especially for the company itself. Most of these frauds were often in the form of accounting and financial manipulation, and they have evolved to change forms. We are going to analyze the aspect of fraud, how it can appear. Then we will try to see the aspects that lead to committing fraud, which are generally an organizational framework favoring fraud, and the psychopathic personality of the fraudulent manager. And finally, we will take a closer look at the role of governance oversight mechanisms and the role they must play in fighting fraud.

scholarly journals Empirical Evidence On The Valuation Of Financial Information In France

2010 ◽  
Vol 9 (3) ◽  
Author(s):  
Melita Stephanou-Charitou ◽  
Adamos Vlittis
Keyword(s):  
Financial Analysts ◽  
Investment Decisions ◽  
Cash Flows ◽  
Financial Information ◽  
Major Research ◽  
French Firm ◽  
First Results ◽  
Financial Scandals ◽  
Credit Financing

We propose and examine empirically the role of financial information; namely, earnings and cash flows in France.  The dataset consists of more than 1,000 French firm-year observations over a ten-year period. Regression analysis is undertaken to test the major research hypotheses.  The major conclusions drawn from the empirical results are summarized as follows.  First, results indicate that both earnings and cash flows are taken into consideration by French investors in their investment decisions.  Second, given cash flows, results show that earnings are always very important to investors and financial analysts for investment purposes.  However, results reveal that investors in France place much more attention to earnings and less attention to cash flows. In summary, the evidence provided in this study supports that indeed there are substantial differences in the way investors and financial analysts perceive financial information, such as earnings and cash flows in France.  The results of this study should be of great importance to the major stakeholders, such as investors, creditors and financial analysts, especially after the latest financial scandals and collapses of giant organizations worldwide.  Furthermore, these results support that fundamental analysis plays a very important role in the capital markets and it should be taken more seriously into consideration by the stakeholders for investing, credit, financing and valuation analysis purposes.

Part A Annotated Guide, 6 Private Enforcement of the Market Abuse Regulation in European Law

2017 ◽  
Author(s):  
Busch Danny
Keyword(s):  
Administrative Law ◽  
Public Law ◽  
Private Enforcement ◽  
Private Law ◽  
European Law ◽  
Legal Systems ◽  
Market Abuse ◽  
Annotated Guide ◽  
Market Abuse Directive

This chapter discusses the role of the Market Abuse Regulation in private law. An infringement of the MAR has an important effect on the private law relations between the infringer and the investing public. As regulatory provisions of this nature are classified as public law, any failure to comply with the MAR will also affect the infringer’s relationship with the competent financial supervisor. In other words, the relevant financial supervisor can enforce these provisions under administrative law in the event of an infringement. This is essentially no different from the situation under of the Market Abuse Regulation’s predecessor—the (former) Market Abuse Directive (2003/6/EC), as implemented in the various national legal systems.

The Evolution in the U.S. of Private Enforcement via Litigation and Monitoring Techniques

2015 ◽  
Author(s):  
James D. Cox ◽  
Randall S. Thomas
Keyword(s):  
United States ◽  
Hedge Funds ◽  
Hedge Fund ◽  
The United States ◽  
Private Enforcement ◽  
Governance System ◽  
Public Companies ◽  
Shareholder Litigation ◽  
Corporate Governance System

This chapter examines the evolution of private enforcement in the United States and the lessons that can be learned by German public companies from the experiences of their US counterparts. It first looks at the place of representative shareholder litigation within the US corporate governance system before turning to the broad-based criticisms against all forms of representative shareholder litigation on the grounds of excessive litigation agency costs. It then discusses the role of shareholder derivative suits in remedying breaches of duty of loyalty, along with the use of hedge funds in shareholder monitoring. It explores the increasing role of appraisal remedy against the backdrop of developments in shareholder litigation focused on acquisitions, and highlights the limitations of hedge fund activism. Finally, it assesses the implications of shareholder monitoring mechanisms in the United States for shareholders in Germany.

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