CORPORATE GOVERNANCE AND ITS IMPLICATIONS FOR FINANCIAL REPORTING

Abstract

Why would it be important to study the financial statements of a company? The answer depends on the particular interest of everyone - whether you are a creditor, shareholder, potential investor, manager, government agency or a trade union leader. For example, short-term lenders, such as banks are primarily interested in the firm's ability to pay obligations to due date. In this case would be examined current assets and their relation to short-term liabilities to assess the short-term solvency of the company. Shareholders, on the other hand, look more on long-term indicators such as capital structure of the company, past and projected income and changes in financial position. Shareholders, or potential, are also interested in many of the characteristics considered by a creditor in the long term. As a shareholder, you should focus on revenues image because changes greatly affect the market price of the investment. They are also concerned about the company's financial situation as it affects indirectly the stability of income. The paper is a research that demonstrates the relationship between corporate governance and financial reporting.