Legal Factors involved in Corporate Management and Ownership Essay

Legal Factors involved in Corporate Management and Ownership - Essay Example However, their negligence of duty can be linked back to the directors over poor management. If the management of the corporation was tough and well organized, there would be no significant financial errors. In words by Harrington & Carter (2009) directors investing in their company dependable on the growth of the company may sometimes viewed as fraud in any occurrence of uncertainty. If the directors invested in the company due to bad financial reports, it is regarded as more negligence. It is with no objection that financial losses incurred in the company should be liable to the directors. The decrease in stock price is also a result from the mistake of the directors and the financial officers. In dealing with this incidence, the fraudulent officers should be sacked or demoted to posts with fewer responsibilities. The directors of the company should take responsibility of the error and compensate investors due to the reduction in stock