THE ROLE OF CORPORATE GOVERNANCE IN MITIGATING FINANCIAL FRAUD

Abstract

This study explores the role of corporate governance in mitigating financial fraud by examining its key mechanisms, such as board size, internal audit committees, performance pressure, and opportunities for fraud. The research adopts a comparative case study approach, analysing five companies with documented fraud cases against their competitors with no fraud history. Secondary data sources, including annual reports and fraud investigation documents, utilized for quantitative and qualitative analysis. were The findings reveal that larger boards and independent audit committees significantly reduce the risk of fraud by enhancing oversight and accountability. Conversely, excessive performance pressure on management fosters unethical practices, while opportunities for fraud persist with the presence of reputable external auditors, underscoring the need for robust internal controls. Regression analysis indicates that 62.4% of fraud occurrences can be explained by the studied governance variables, with statistically significant relationships affirming their collective impact. even The study emphasizes the need for diverse and functional boards, resilient audit mechanisms, and a focus on long-term sustainability over short-term gains. It highlights the limitations of relying solely on external auditors and advocates for integrating internal and external audit functions. By addressing governance gaps, organizations can strengthen their resilience to fraud, foster transparency, and maintain stakeholder trust. Recommendations for policymakers and corporate leaders include adopting ethical governance frameworks and prioritizing sustainable business practices to mitigate fraud risks