Finance & Corporate Governance

Layer-2 domain pack: descriptive invariants about accounting boundaries, capital flows, and comparator drift.

Layer-2 descriptive grounded

L2-FIN-01 — Financial Metrics Are Operational Comparators

Statement

Financial reporting metrics compress multi-dimensional activity into standardized accounting representations.

Primitives

P5 P10 P4

Composites

C3

Notes

Revenue/EBITDA/EPS/ROI act as compressions; optimizing the metric reshapes behavior.

L2-FIN-02 — Capital Flows Follow Regulatory and Incentive Gradients

Statement

Capital allocation shifts in response to differences in regulation, tax, risk comparators, and expected return gradients.

Primitives

P1 P7 P10

Composites

C1

Notes

Arbitrage exploits boundary differences; gradients drive flows.

L2-FIN-03 — Accounting Boundaries May Not Match Economic Impact Boundaries

Statement

The accounting boundary of an entity may differ from where economic effects manifest.

Primitives

P1 P5 P9 P10

Composites

C5

Notes

Off-balance-sheet, risk transfer, and externalities are boundary/ledger mismatches.

L2-FIN-04 — Short-Term and Long-Term Comparators Operate on Different Feedback Cycles

Statement

Short-term performance metrics and long-term value generation operate on distinct feedback timelines.

Primitives

P6 P10 P5

Composites

C9 C10

Notes

Quarterly cycles vs long-duration investments; delays produce misalignment.

L2-FIN-05 — Local Incentive Structures Can Shift Enterprise-Level Risk Profile

Statement

Incentives at desk/department/executive levels can alter aggregate firm risk posture.

Primitives

P7 P10 P6 P1

Composites

C10 C7

Notes

Bonus-linked KPIs and asymmetric payoffs shift behavior under hierarchy.

L2-FIN-06 — Governance Mechanisms Lag Market Feedback Speed

Statement

Market feedback often operates faster than formal governance and regulatory processes.

Primitives

P6 P9 P7

Composites

C9 C8

Notes

Innovation outpaces oversight; postmortems often misattribute causality.

L2-FIN-07 — Risk Distribution Can Be Separated from Decision Authority

Statement

Decision authority over risk exposure may be separated from the location and timing of risk realization.

Primitives

P1 P5 P9 P6

Composites

C5 C8

Notes

Derivatives, securitization, and long-tail liabilities create misaligned accountability.

Use this pack to map real artifacts (policies, configs, incidents) into the spine. Then run a gap-check: what grounding effects are missing?