Research-Thesis: The role of corporate governance in preventing financial fraud: insights from practitioners in Luxembourg.

Abstract

This thesis examines the role of corporate governance in preventing financial fraud through the lens of practitioner experience in Luxembourg. Against a backdrop of recurring corporate scandals and successive waves of regulatory reform, the study investigates how governance mechanisms are perceived, implemented, and experienced in practice. Drawing on seven semi-structured interviews with audit and compliance professionals, analysed through thematic analysis, the research identifies five interconnected dynamics. Formal governance structures, while widely present, do not always translate into substantive oversight. Organisational culture emerges as a central determinant of governance effectiveness, shaped more by daily managerial behaviour than by formal frameworks. External audit operates under structural constraints that limit its capacity to meet stakeholder expectations. Whistleblowing, though empirically recognised as a powerful detection mechanism, faces specific challenges in Luxembourg's tightly networked financial market that legal protections alone cannot fully address. Post-scandal reforms have produced meaningful progress in some areas while generating primarily documentation in others. The findings suggest that the effectiveness of governance in preventing financial fraud depends less on structural design than on the cultural and human conditions in which mechanisms are implemented. The gap between governance as designed and governance as practised is not incidental but reflects deeper organisational and institutional dynamics. The research contributes to the corporate governance and fraud prevention literature by foregrounding practitioner perspectives and calls for greater attention to the behavioural and cultural dimensions of governance that regulatory reform has not yet fully reached.