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Behavioral Finance - Essay Example
Pages 6 (1506 words)
Regulatory frameworks are at the heart of every system in the world in order to get it running in an organized way and yield the best possible results. In the corporate world, this regulatory framework relates to the different requirements for running the operations of the businesses as well as the further regulations for reporting the financial performance of the organization (Irene Henriques, Perry Sadorsky, 1999).
The financial reporting standards perform the function of regulating the business world by laying down the accounting standards and procedures which the limited companies need to follow. This not only helps in getting the financial information about companies on a common base by having standardized policies, but also serves the purpose of providing the users of financial statements with clear, accurate, reliable and relevant information (2005).
In the United Kingdom, there are three basic elements of the regulatory framework for all the listed companies. The government has its role in regulating the businesses by way of the Company Law; the accounting professionals perform their duties by preparing, interpreting and implementing the accounting standards being prepared for the financial reporting purpose; and finally the stock exchange keeps a check by having various stock exchange rules for the companies listed in the London Stock Exchange.
The Company Law is to be fulfilled by all the limited companies whether public or private, however there are variations depending upon the nature of the entity. ...