Corporation Transactions and Misrepresentation of Financial Reports
Business law also called commercial law is a branch of civil law that governs business as well as, commercial transactions, and deals with both the private and public law. The branch created to ensure that, they are no exploitation and manipulation of people as well as rules and regulation in order to benefit some members of a business. This means that should one break or manipulate the rules and regulation in his favor. The or she must face the court in accordance with the law. With legal rights of all investors considered as an important element of the business law, we examine the board changes within the filling of the shareholder derivative lawsuits and might not be frivolous. Also, lack of highly competent employees within a business can lead to tremendous losses and to some extent closure of the business in accordance with law, due to the loss incurred. This is due to unethical factors arising due to misrepresentation of financial position of the company.
Introduction
Legal wise, protection of shareholders' rights is considered as an important element of business law and governance (Shleifer & Vishny, 1997). Therefore, the law allows the shareholders to bring lawsuits against managers or directors, when they realize that managers have exploited or manipulated their position of control inappropriately. There are proper rules and regulations set aside to dealing with issues of lawsuits (Beck & Bhagat, 1997). Also, there is enough evidence of business or corporative governance changing in certain lawsuits (Jones & Weingram, 1996).
Financial misrepresentation is the failure to provide accurate and correct portrait of financial position of a company. This is against the business law (Jensens, 2004). Since all have different cultures with values and ethics, it is unethical for a company not to provide clear financial position, and this affect the company's stakeholders.
Cases
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