Financial Reporting Practices in a Developing Country - Dissertation Example

Nevertheless, lately, the definition of corporate governance has gained a broader connotation and is denoted as the legal as well as a corporate set of regulations and measures that symbolize the principles and procedures which are exercised to govern corporate organizations. The standards of corporate governance by and large assist in making sure that the aspects of the allocation of power in an organization are well maintained and that there exists accountability among the management. The most significant contributor to corporate governance comprises the Board of Directors as well as the senior management of a firm (Plessis et. al., 2010).

The significance of corporate governance in the context of financial reporting can be elucidated by relating the association between the business and society. The main purpose of corporate governance is to check the negative influence of corrupt business practices on society and the general public. The past instances of corporate governance malfunctions have provided sufficient proof of a negative influence on society owing to corporate failure. Conversely, the theories of society and business associations elucidate that each business is indebted to society on the whole and hence, its chief precedence is to meet social responsibilities by not getting involved in any unprincipled business activities (Eweje, 2004).

Nevertheless, in due course of time, the occurrence of corporate governance malfunction has amplified radically owing to a number of corporate scandals. Then again, at the present time, the association involving business and society has turned out to be more significant and it has been developing continuously. As a result, the accountabilities of businesses for its society have also become more noteworthy. In this context, the administration of stakeholders and business ethics are the most essential criteria.

These two factors are usually covered in the code of corporate governance that attempts to meet the responsibilities toward society as a whole (Carroll & Buchholtz, 2008). With respect to the existing significance of corporate governance for the social as well as economic benefits, a number of developed nations and world organizations.