Preventing disorderly corporate collapse and stakeholder losses: are directors the answer?

We consider regulations that shape directors’ reporting responsibilities and reflect on the association between disorderly corporate failures and low quality accounting, reporting and auditing. To this end we summarise work exploring the statutory role of directors; evidence on corporate failures and the co-occurrence of financial reporting misconduct; and research on the link between governance mechanisms and reporting quality. We also highlight lessons from the Sarbanes-Oxley Act of 2002 and review U.K. Government proposals for reform issued in 2021 in light of these lessons. Collectively, these analyses reveal five themes to consider when establishing directors’ responsibilities to uphold financial reporting quality: accounting misconduct is often a symptom rather than a cause of failure;the dangers of making accounting a scapegoat for broader governance failings; how proportionality is normally framed by the costs of regulation but not the expected benefits;the virtue of a humble approach to regulation that normalises learning, correction, and revision; and the regulatory implications of the increasing use of technology in the reporting process