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Corporate Governance
Student’s name
Institution
Date

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Table of Contents
Corporate Governance .................................................................................................................... 3
Introduction ................................................................................................................................. 3
Equity investment decisions and consolidation control guidelines ............................................ 3
Audit regulations and quality reporting ...................................................................................... 5
A real-world business case- Wirecard AG.............................................................................. 5
Theranos under Elizabeth Holmes .......................................................................................... 6
Solutions to fraud management .................................................................................................. 6
Conclusion ...................................................................................................................................... 8
References ....................................................................................................................................... 9

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Corporate Governance
Introduction
Corporate governance lays the system of regulations, practices, and structures by which
organizations are required to abide by. Essentially, it describes the way firms are governed and
for what purpose. Power and accountability are identified with a view of understanding who
makes what decisions and at what cost. Corporate governance systems are differentiated based
on the degree of ownership, identity, and shareholder control. Even though some systems are
characterized by broad ownership (in the case of outsider systems), others are characterized by
concentrated ownership control (the insider systems) (Khurana & Zhong, 2021). This analysis
will examine peer firm tax avoidance and ethical financial fraud concerning specific companies
such as Wirecard and Theranos and the impacts on corporate America and accountancy
institutions.
Equity investment decisions and consolidation control guidelines
Beck et al. (2017) assert in their article that rules-based standards of accounting provide
an opportunity for transactions to be structured. This can lay the ground for accounting frauds
and scandals to arise and are linked to companies that structure their transactions to avoid the
bright-line regulations. Previous research indicates that the concept of bright-line accounting
principles motivates firms to avoid the equity approach of accounting consolidation by keeping
equity percentage ownership below a certain mark of 20 and 50% (Beck et al., 2017).
Nevertheless, recently there have been massive changes regarding IFRS and GAAP
principles specifically on regulations surrounding business combinations and the control concept.
Provided the IFRS and GAAP similarities in equity investment accounting principles and their

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recent focus on the control concept, it is not expected that US GAAP or IFRS companies will
participate in transaction-structuring practices and hold concentrated ownership at or under 50%
(Beck et al., 2017). The research broadens previous studies by examining whether the practice of
pegging the investment percentage at 50% or under is present in the current FASB and IASB
reporting surroundings. It also assesses the implications of the same.
The empirical research used data from 2004-2008 which investigated whether companies
participate in s...