Assessing the Effects of Organizational Governance Mechanisms on Accounting Irregularities and Fraudulent Behavior

Posted: Feb 05, 2022

• Ava Taylor
• Avery Nguyen
• Avery Williams

Abstract

The persistent challenge of accounting irregularities and fraudulent behavior in organizational contexts represents a significant threat to economic stability and investor confidence. Traditional governance mechanisms, while essential, have demonstrated limited effectiveness in preventing sophisticated fraudulent schemes that exploit systemic vulnerabilities. This research introduces a paradigm shift in governance assessment by integrating computational behavioral analysis with conventional governance metrics to create a more robust predictive framework. The fundamental premise of our approach is that fraudulent behavior manifests through detectable patterns in organizational communication, decision-making processes, and network structures long before it materializes in financial statements. Current literature on organizational governance has predominantly focused on structural components such as board composition, audit committee characteristics, and regulatory compliance frameworks. While these elements provide necessary foundational safeguards, they often fail to capture the dynamic behavioral undercurrents that precede accounting irregularities. Our research addresses this gap by developing a multi-modal analytical framework that processes both quantitative governance metrics and qualitative behavioral signals to identify organizations at elevated risk of fraudulent activities.