Corporate governance and accounting irregularities: evidence from the two-tier board structure in Indonesia

There have been, and continue to be, serious financial scandals involving accounting irregularities in leading companies. While responses to these occurrences include the introduction of tougher regulations such as the Sarbanes-Oxley Act of 2002 (SOX), further serious instances have occurred, notably the 2008 subprime mortgage and financial institution meltdown. The existence and persistence of such cases of financial scandals have led many investors, regulators, companies and academics to try to reduce such incidence by improving the effectiveness of corporate governance and increasing awareness of the red flags which could cause accounting scandals. The relationship between individual corporate governance dimensions and corporate governance as a system orientated toward accounting irregularities has been tested. However, empirical measurements and tests are limited and largely based in one-tier board system environments. The outcomes are almost impossible to apply in two-tier board systems, where relationships between governance mechanisms and accounting irregularities are not fully understood. Using the agency theory and fraud theories, this research is undertaken in Indonesia to provide insights that extend the body of knowledge about the practices of the two-tier board system. This study investigates the extent to which the Indonesian corporate governance system acts as an effective tool in protecting financial statement users against accounting irregularities.

Name dc:type.qualificationname

other

Level dc:type.qualificationlevel

other

Grantor dc:publisher.institution

Victoria University

Year dc:date.issued

2013

Author dc:creator

• Jaswadi, Jaswadi

• 1501 Accounting, Auditing and Accountability
• 1503 Business and Management
• College of Business

Language dc:language

en