Forensic governance: Detective work focused on corporate risk can help protect shareholder value

Forensic accounting plays a vital role in assessing governance quality—a key consideration for global investors.

KEY TAKEAWAYS

Emerging markets, due to their often less-developed regulatory regimes, may leave investors more exposed to governance risks than developed markets, making typical approaches to assess governance practices inadequate for companies. As such, specialized governance research becomes even more valuable.
While developed markets, including Europe and the U.S., typically have stronger governance and regulatory standards, proper oversight of a company’s management is essential, irrespective of jurisdiction.
By focusing on six primary factors to assess corporate governance quality—related parties, forensic accounting and audit, legal and regulatory, history and structure, board structure, and management practices—Fidelity’s corporate governance and forensic research helps identify factors that, if missed or ignored, could result in significant loss in shareholder value.
Strong corporate governance helps protect shareholder rights, the interests of a company’s providers of capital, and other stakeholders.
Fidelity’s Governance and Forensic Accounting (GFA) team’s proprietary framework and custom models help flag potentially problematic corporate behavior to sort out the leaders from the fraudsters.