A REVIEW OF U.S. FINANCIAL REPORTING SCANDALS AND THEIR ECONOMIC REPERCUSSIONS: INVESTIGATING THEIR BROADER IMPACT AND PREVENTATIVE MEASURES

Abstract

This study provides a comprehensive analysis of financial reporting scandals in the United States, focusing on their evolution, impacts, and the effectiveness of preventative strategies. The primary objective was to understand the historical development of financial reporting, identify the mechanisms of financial scandals, assess their economic and social repercussions, and evaluate the regulatory and technological responses implemented to prevent such occurrences. Employing a systematic literature review and content analysis, the study analyzed data from academic journals, government publications, and reports from financial regulatory bodies, with a focus on literature published between 2010 and 2023. The key findings reveal that financial reporting scandals have significantly influenced corporate governance and financial regulation, leading to substantial economic and social impacts, including loss of investor trust and market instability. Preventative strategies, notably legislative reforms such as the Sarbanes-Oxley and Dodd-Frank Acts, have been instrumental in enhancing transparency and accountability in financial reporting. Technological innovations have also emerged as vital tools in detecting and preventing financial irregularities. The study concludes that building a resilient financial reporting landscape requires continuous adaptation to technological advancements, development of sophisticated risk management tools, and fostering a culture of ethical reporting. Policymakers and industry leaders are urged to focus on creating balanced legal frameworks that encourage transparency and protect against financial malpractices, thereby ensuring a financial reporting environment that is transparent, accountable, and resilient against future challenges.
 Keywords: Financial Reporting Scandals, Corporate Governance, Regulatory Reforms, Preventative Strategies.