Accounting

THE ROLE OF FINANCIAL ACCOUNTING INFORMATION IN STRENGTHENING CORPORATE CONTROL MECHANISMS TO ALLEVIATE CORPORATE CORRUPTION

Arvanitidou Virginia, University of Macedonia, Greece Konstantinidou Eleni, University of Macedonia, Greece Papadopoulos Dimitrios, University of Macedonia, Greece Xanthi Chrysoula, University of Macedonia, Greece

ABSTRACT

Corporate governance, as an antidote to corruption, has been attracting a lot of attention and debate lately. This study is an attempt to examine the relationship between financial accounting information, corporate control mechanisms and corruption. We critically examine the relevant literature that investigates the governance role of financial accounting information as the direct and indirect use of externally reported financial accounting data in control mechanisms. Specifically, we focus on the role of accounting data in prevalent control mechanisms (primarily in executive compensation contracts) and the underlying causes that led to the shift of contracts towards option awards. Corporate control mechanisms are among the most effective tools to reduce the incidences of corruption, from its supply side, because they promote values such as accountability, transparency, fairness and responsibility. These mechanisms are fundamental for the enhancement of the operation of securities’ markets which in the dubious environment of the 21st century seek relevant and reliable information based on transparent financial statements.

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COMMENTS AND THE PURPOSE OF THE PAPER
Corruption is one of the world’s greatest challenges due to its occurrence in every part

of the world and its detrimental effects on the overall development of countries. The solution to this multidimensional phenomenon, which is caused by several factors, should include the enforcement of powerful corporate control mechanisms, since corporate governance can become a critical catalyst against corruption practices. The purpose of this paper is to...