There are several business policies and procedures to control or limit the risk of corporate fraud.
1. Facilitation of information to the market and to improve the problem of information asymmetries.
Financial regulators have imposed disclosure requirements as a central pillar of financial market regulation in all developed financial markets (Seligman, 1983; Coffee, 1984; Mahoney, 1995; Selden, 2006). The issuers of financial tools and financial services providers have to disclose to the market and their counterparties all relevant information, in a timely manner, and make sure all market participants have equal access to this information.
2. Protection of individuals.
The legal systems may impose duties or suitability requirement on certain market participants in order to provide the required protection of individuals who participate in the financial market with insufficient expertise to understand the information and avoid being manipulated by the others, who are more expert in the market.
3. Legal systems.
The legal systems prohibit certain deceptive behavior through general fraud laws, which may appear in both civil and criminal bodies of law (Podgor, 1999; Buell, 2006, 2011; Ryder, 2011, pp. 93–139; Harrison and Ryder, 2013, pp. 61–90). The law provides several legal acts that target different kinds of financial fraud. For example, the acts that target financial fraud in the banking or insurance sector, fraud perpetrated using mail and wire communications, or fraud perpetrated through the use of a computer or the Internet.
Reference
Rockness, H., & Rockness, J. (2005). Legislated ethics: From enron to sarbanes-oxley, the impact on corporate america. Journal of Business Ethics, 57(1), 31-54. doi:10.1007/s10551-004-3819-0
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