<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Business entities operated in the form of capital companies, to maintain reliability and transparency of the activities conducted, should observe general supervisory framework of legal nature. The primary objective of the information policy is to provide stock market participants with appropriate standards of company transparency which through the corporate governance regulations should lead to the improvement in the quality of financial reporting. Financial statements should be reliable as it is only then that their aims and targets are met, and the image of business they depict should be created according to the <italic>true and fair</italic> principle, invoking the responsibility of individuals supervising the process of drawing up a financial statement. The aim of the paper is to indicate the essence of the relationship between the quality of financial statements and the application of corporate governance principles. The paper uses the analysis of regulations and review of literature in the field of corporate governance and reporting of listed companies. The results of the analysis confirm that the quality of reported information determines the effectiveness of corporate supervision; that integrated reporting (IR) is a tool enabling organizations to communicate their value to investors; and that corporate supervision allows said organizations to adopt the comprehensive approach in developing sustainable value.</p></abstract>

Business entities operated in the form of capital companies, to maintain reliability and transparency of the activities conducted, should observe general supervisory framework of legal nature. The primary objective of the information policy is to provide stock market participants with appropriate standards of company transparency which through the corporate governance regulations should lead to the improvement in the quality of financial reporting. Financial statements should be reliable as it is only then that their aims and targets are met, and the image of business they depict should be created according to the true and fair principle, invoking the responsibility of individuals supervising the process of drawing up a financial statement. The aim of the paper is to indicate the essence of the relationship between the quality of financial statements and the application of corporate governance principles. The paper uses the analysis of regulations and review of literature in the field of corporate governance and reporting of listed companies. The results of the analysis confirm that the quality of reported information determines the effectiveness of corporate supervision; that integrated reporting (IR) is a tool enabling organizations to communicate their value to investors; and that corporate supervision allows said organizations to adopt the comprehensive approach in developing sustainable value.

The relations between the quality of financial statements and corporate governance

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Business entities operated in the form of capital companies, to maintain reliability and transparency of the activities conducted, should observe general...

Issue	Financial reporting	Integrated reporting
Responsibility for the capital	Financial capital	All kinds of capitals
Mindset	Isolation of individual departments	Integration of individual departments
Timeline	Short-termism	Short-, medium-, long-termism
Focus of interest	Financial issues from the past	Strategic issues concerning the past and future
Building trust through transparency	Limited trust caused by narrow disclosure	Greater trust caused by greater transparency
Adaptation of report	Close connection with standards in force	Individual approach corresponding to specific
		conditions of an entity’s operation
Conciseness	Long and complex	Concise and covering essential issues
Use of technology	Primarily using “paper”	Using new technologies

The relations between the quality of financial statements and corporate governance

Article Category: Review

Published Online: Jun 30, 2019

Page range: 118 - 126

Received: May 24, 2018

Accepted: Mar 13, 2019

DOI: https://doi.org/10.2478/ijme-2019-0009

Keywords
corporate governance, information function of accounting, integrated report

© 2019 Iwona Franczak, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Figure 1

Figure 2

List of differences as to the approach to drawing up a financial statement and an integrated report

The relations between the quality of financial statements and corporate governance

Article Category: Review

Published Online: Jun 30, 2019

Page range: 118 - 126

Received: May 24, 2018

Accepted: Mar 13, 2019

DOI: https://doi.org/10.2478/ijme-2019-0009

Keywordscorporate governance, information function of accounting, integrated report

© 2019 Iwona Franczak, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Figure 1

Figure 2

List of differences as to the approach to drawing up a financial statement and an integrated report

Keywords
corporate governance, information function of accounting, integrated report