The Effects of governance mechanisms on corporate disclosures and financial reporting

ABSTRACTNowadays, publicly owned companies have more complex structures than past.The main reason for this, is that there are lots of shareholders and that there is nopossibility for these shareholders to manage the company together at the same time.However, these big companies can effect not only shareholders, but stakeholders thatincludes customers, suppliers, workers, creditors, government, community and lots ofstake groups like these. These groups can also help or destroy company in differentways. While we consider all of these, it is possible to say that companies long termsuccess depends on protecting shareholders? and other stakeholders? interests in equalway.Top management announces its? actions and plans to shareholders and otherstakeholders through corporate disclosures. So, truthfulness of these infarmations whichdisclosed are very important for these groups to make desicions about company. On theother hand, these informations proof that if top management manages company inaccordance with laws and other ethic rules, and if they manage company by consideringall shareholders? and stakeholders? rights and interests in equal way.Sometimes, we observe that top managers are involved in frauds to serve theirown interests or serve strong groups? interests like shareholders who have a big share incompany. Managers that involved in fraud can manipulate corporate disclosures,especially financial reports, that ensure these managers accountability to stakeholdersand shareholders in different ways. These fraud events that occured international areasin recent years, have damaged national economies and destroyed public confidenceabout corporate disclosures. So, corporate governance concept which is an effective waythat ensures managers accountability, transparency equality and responsibilityprimarily to shareholders and than stakeholders has developt. There are lots of effortsto guaranty corporate disclosure process?, especially financial reporting process?,accuracy thruogh governance mechanisms which are established on forms like board ofdirectors, audit committees, top management team inside the compamy and like outsidedirectors that audit financial reports outside the company.In this study, I examine corporate governance mechanisms? effects, which areestablished on forms like board of directors, audit committees, top management teamand outside directors on corporate disclosure process and financial reporting which isan important part of this process.Key Words: Corporate governance, governance mechanisms, corporate disclosures,financial reporting.