The Impact of Corporate Governance Essay

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Running head: THE IMPACT OF CORPORATE GOVERNANCE 1 The Impact of Corporate Governance and Ethics when Dealing with Full Disclosure and Financial Reporting Aurora F. Streeter University of Maryland University College Finance 620 Dr. John Halstead The Impact of Corporate Governance and Ethics when Dealing with Full Disclosure and Financial Reporting Corporate governance is a set of values and rules that govern the way an organization operates. Included in these rules and values is the detailed information on who is responsible and accountable for ensuring that the firm is working in the interest of the key stakeholders. These rules establish a culture within an organization that fulfills the long-term goals of the company while taking into consideration the needs and interests of all parties involved. Along with these rules is the ability to comply with the regulations set by the Security and Exchange Commission and the requirements necessary to operate on a daily basis. Without a strong corporate culture and an ongoing investment into improving and regulating corporate governance, organizations face the potentials of fraud, poor credibility, and could face potential fall-out that has recently plagued many of the large corporations. In 2002, the Sarbanes-Oxley Act (SOX) was introduced to regulate the amount of organizational transparency needed for outside interest and to re-evaluate the performances of auditors who failed to recognize fraudulent financial information. As a result of large corporate scandals that affected companies like Enron and WorldCom, SOX was needed to set new policies for public company boards, management, and accounting organizations that deal with financial reporting. The pressures of meeting financial goals often cause unintentional financial woes among financial managers. These

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