The Effects of Accountability, Governance Capital, and Legal Origin on Reported Frauds

Abstract

An institutional perspective is employed to illuminate the complexity of frauds in various diverse economies, in order to enhance the efficacy of previous accounting concepts. In this study, the effects of the legal, regulatory and human framework of the strength of auditing and reporting standards, and the governance capital related to global sustainable competitiveness and economic growth, etc. are analysed by linear regression (OLS) methods. Moreover, the role of other indicators i.e. financial freedom, the extent of director liability and legal origin, are interrelated with the number of fraud cases. From the results, it appears that an increased level of governance capital, financial freedom from government pressure, strengthened transparency and more protected minority investors through liable directors might increase the number of reported fraud cases in the countries and years examined. The existence of legal origin also seemed to be an appropriate proxy for an improved understanding of fraud characteristics. This evidence suggests it is worth investigating in depth the nature of financial crimes across countries for a better understanding of this phenomenon. In this way, these findings might have sufficient potential in the case of adequate policy implications within a less litigious business environment to resolve the undesirable consequences of impending financial downturns, and to achieve sustainable competitiveness and economic development.

Semi-supervised Credit Card Fraud Detection via Attribute-Driven Graph Representation

“…The great losses caused by financial fraud have attracted continuous attention from academia, industry, and regulatory agencies. For instance, as reported in (AlFalahi and Nobanee 2019; Máté et al 2019), financial fraud detection plays a critical role to support the sustainable economic growth. However, fraudulent behaviors against online payments, such as illegal card swiping, have caused property losses to online payment users (Bhattacharyya et al 2011b).…”

Does Technology Matter for Combating Economic and Financial Crime? A Panel Data Study

“…Using Control of Corruption as an independent variable, Sadaf et al (2018) validate that boosted political stability and controlled corruption may reduce the number of frauds in several countries. Another relevant paper that focuses on the issue of frauds is the study of Máté et al (2019), which proves, through OLS regressions, that higher levels of auditing and accounting standards, increased levels of governance capital, advanced financial freedom and the use of common law are positively related to reported fraud cases.…”