Corporate governance and forensic analysis have taken centre stage in the investment world, driven by scandals like Enron in 2001 and Satyam in India. These events exposed how weak oversight and financial manipulation can devastate markets. Enron’s concealment of debt caused shareholder losses of over $74 billion, while Satyam’s inflated profits led to a 70% stock drop in a single day. Such incidents reshaped investment strategies, prioritizing governance and forensic checks.

Financial statements, once trusted, can be manipulated, making deeper scrutiny essential. In India, governance issues like accounting fraud and capital misallocation are widespread, with 40% of BSE 500 companies exiting the index over a decade, as per Marcellus. Research also highlights financial red flags as indicators of manipulation, emphasizing the need for robust analysis.

Strong governance fosters transparency and stability, enabling informed decisions and reducing risks. Forensic analysis adds value by detecting unusual profit margins, cash flow issues, and governance lapses. Red flags like abrupt auditor resignations or policy changes signal deeper problems.

Forensic and governance analyses are now indispensable, helping investors identify risks, address red flags, and make confident, data-driven decisions.