A Study of the Civil Liabilities of Corporate Directorsased on Financial Information Disclosure
Date Issued
2008
Date
2008
Author(s)
Hung, Pei-Chi
Abstract
In the last 10 years, a number of companies listed in TSE or GreTai have released phony financial statements to the public. The series of events triggered off the issue of responsible directors and has attracted much of the attention from the public. There are several amendments of laws but there is still no objective standard for determining the negligence of directors and their proportion of accountability under law and in practice. In this paper, 17 companies in financial crisis were taken as cases in the study on the basis of the agency theory and asymmetries of information with an attempt to generalize the operation of the boards generally practiced in the companies and clarify the role of the directors in the company. Data were complied and inductive-analysis method is adopted in the study. This paper is paper is an attempt to propose the standard for judgment under Article 20-1 of the “Securities and Exchanges Act” on “the proportion of accountability on negligence of directors in order to narrow the gap between applicable law and practice. he causes of financial crisis of the 17 cases in point will be traced. The findings showed that these companies attempted to conceal the facts of conversion or embezzlement of company assets by deputy agents of the companies thereby the provided false accounts in the financial statements containing information under the account titles of cash and cash equivalents, other receivables, prepayments, temporary cash receipts, revenues, current accounts of related parties. There are also characteristics common to all 17 companies in financial crisis. They are “centralization of ownership”, “directors holding position in the management”, and “family business”. he summary of this paper is:1) If the information disclosed in financial statements of specific company is found false, review if the directors who have an advantage to access to information have willfully conceal material facts even though all other directors shall be held responsible for negligence. If so, the accountability of all other directors shall be not as severe as the faulty directors because they are blinded from full information and cheated to the extent that they made improper judgment.2) All other directors could just access to partial information and are just involved in the preparation of financial statements. Their responsibility in negligence shall be not as severe just because they failed to exercise care under due diligence.
Subjects
Civil Liabilities of Corporate Directors
Financial Information
Agency Theory
Information Asymmetry
Economics of Information
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
ntu-97-P93323008-1.pdf
Size
23.53 KB
Format
Adobe PDF
Checksum
(MD5):3d555b6f14effe54ab775962c0d60699