**Abstract**

The financial scandals which have appeared in recent times have placed fraud at the heart of economic and financial issues. Fraud by executives has disastrous consequences as it results in huge losses for investors and creditors, and especially for the company itself. Most of these frauds were often in the form of accounting and financial manipulation, and they have evolved to change forms. We are going to analyze the aspect of fraud, how it can appear. Then we will try to see the aspects that lead to committing fraud, which are generally an organizational framework favoring fraud, and the psychopathic personality of the fraudulent manager. And finally, we will take a closer look at the role of governance oversight mechanisms and the role they must play in fighting fraud.

**Keywords:** fraud, disclosure, control mechanisms, psychopathic leader

#### **1. Introduction**

Financial fraud committed by managers have multiplied in recent years; however, they constitute a highly delicate phenomenon in the world of finance. Each year, fraud causes significant losses to the shareholders and creditors of the targeted companies, which hinders the proper functioning of the capital markets. Fraud is generally committed by executives who are very often involved and are subject to legal action by financial market regulators.

The revelation of a fraud tarnishes the reputation of several participants in the financial markets, thereby affecting investor confidence in the market and penalizing all businesses [1]. In fact, any fraud announcement leads investors to question the competence and vigilance of financial market regulators, and even auditors, financial analysts, boards of directors, and credit rating agencies, all these actors have their share of responsibility.

In addition to the financial losses suffered by investors, other losses are added, such as the socio-economic costs related to job losses [2], and can even go as far as the disappearance of the whole entity. But the question that arises is as follows: Given the financial losses and reputation suffered, why do business leaders or entrepreneurs engage in fraud and manipulation? Can we determine the individual and organizational responsibilities that lead to fraud committed by leaders and entrepreneurs?

What tools and strategies are available to a board of directors to detect and prevent such fraudulent practices? We will try to answer these questions, by proceeding as follows: we will first carry out a synthesis of the main types of fraud committed by managers. Secondly, the motivations of the main actors and

#### *Corporate Social Responsibility*

to identify the attributes, whatever it is individual or organizational likely to lead to fraud. Third, we will focus on the profile of the fraudulent leader. And finally, we will present the recommendations for the various actors responsible for the integrity of the financial markets which are the boards of directors, the regulatory bodies, the accountants, and the auditors.
