In the context of the globalization and internationalization of economies, to efficiently attract financial and intellectual capital that is necessary for business sustainability, the mechanisms of corporate governance have to be based on gaining the trust of all the interested parties. These objectives require an organizational culture and a climate which is based on correctness, responsibility, transparency, and efficiency, in which ethical principles govern the spread of behaviors in the entire entity. This research identifies the relation between the corporate governance and the entities’ financial performance using the specific context of Romania. The findings of this study reveal new insights on the corporate governance and financial performance based on a sample of companies listed on the Bucharest Stock Exchange. The results show a positive correlation between the net accounting results, earnings per share, and the duality of the CEO, and a negative correlation between price per share and the duality of the CEO.
The Beneish model is a useful tool for assessing the potentially fraudulent behaviour of an entity that could resort to misstated financial reporting by manipulating earnings. Tarjo ---amp--- Herawati (2015) concluded that “the M-score of the Beneish model was generally able to detect financial fraud”, following a study on 35 listed companies that were confronted with allegations of fraud in the period 2001-2014, by accessing the sanctions database applied to companies of public interest (issuers) published by the Financial Supervisory Authority. Also, Ahmet Ozcan (2018) stated that the Beneish model “brings effective value in the analysis of the quantitative characteristics of falsified financial statements”, a conclusion based on a concentrated research on a sample of 174 firms over the period 2005-2017. However, the construction of this model was not oriented for the financial services industry, therefore the studies referred to above do not include any investment firms. Our research aims to assess the relevance of the use of the Beneish model to entities involved in scandals on fraudulent or suspected distorted financial reporting operations (Romcab, 2017 and Harinvest, 2013) in order to Test the Beneish model’s validation capability. On the basis of the conclusions obtained, it can be accepted that the applicability of the model is validated for the entities examined.
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