Whistleblowing Legislation And Its Role Of Corporate...

Whistleblowing Legislation and Its Role In Corporate Governance Whistleblowing occurs when an employee, contractor or supplier goes outside the normal management channels to report suspected wrongdoing at work. A study indicates that no specific actor dominates the revelation of fraud: â€Å"short sellers and equity holders revealed the fraud in 9% of the cases; financial analysts and auditors revealed 14% each; the Securities Exchange Commission (â€Å"SEC†) accounted for 6%; the media accounted for 14%; non-financial market regulators 16%; and employees (whistleblowers) accounted for 19%. The United States enacted sweeping legislation to protect whistleblowers after a series of corporate scandals, but more is needed. Since whistleblowing plays an important role in the corporate regulatory scheme, this paper will explore policies needed for a more effective corporate governance. Events Leading to the Enactment of Legislation The events that led to legislative action from Congress were the Enron and WorldCom scandals. Enron Corporation was an American energy company based in Houston, Texas which originally was solely a natural gas provider which then evolved into one of the world’s major energy-commodity traders. On August 2001, Sherron Watkins, the Vice President of Enron at the time, alerted the then–CEO Ken Lay of accounting irregularities. By the end of November 2001, Enron shareholders filed a $40 billion lawsuit after the company s stock price, which achieved a high ofShow MoreRelatedThe Main Threats That Business Leaders Within The 21st Century1531 Words   |  7 PagesIntroduction Corporate governance can be defined as a set of laws, policies and processes impacting on the way organisations are controlled (Saheed, 2013). 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