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Corporate Governance after the Financial Crisis

Corporate Governance after the Financial Crisis

Edited by P. M. Vasudev and Susan Watson

The financial crisis of 2008–09 raises questions about the assumptions that underpin corporate governance. Shareholder value and private ordering may not in fact be the best means of promoting efficiency and corporate responsibility and the mechanisms used to ensure management accountability may not be effective. In this fascinating study, experts from around the world draw on the experience of the financial crisis to explore topical issues ranging from shareholder primacy and the corporate objective to the stakeholder principle, business ethics, and globalization of corporate governance principles. The chapters are provocative, acknowledging that our understanding of fundamental questions of corporate governance is still developing and demonstrating that the corporate governance debate is far from over.


P.M. Vasudev and Susan Watson

Subjects: business and management, corporate governance, law - academic, company and insolvency law, corporate law and governance


P.M. Vasudev and Susan Watson CORPORATE GOVERNANCE – AN OVERVIEW For a short while in 2008–09, as the wave of the Global Financial Crisis swept over us, it seemed that the world might change. The tenets that underpinned our economic systems were called into question, and faith in the invisible hand of the market wavered. When speculative credit derivatives business began to unravel at many large financial institutions, it threatened to destroy giant companies of long standing, such as Citigroup and American International Group (AIG). This sparked fears about a systemic collapse at the global level. The disaster, largely of human making, was averted by the ‘bailouts’ organized by the government of the United States in coordination with the Federal Reserve. Once the immediate crisis had passed leaving the rescued institutions intact, the immediacy of the need for fundamental change also seemed to pass. Several years on, the world looks much the same. The clean-up after the acute emergency of the sudden meltdown continues. To cynics, the international response to the Financial Crisis has had a dreary predictability: much hand wringing, and regulatory responses that addressed symptoms of the Crisis without touching the underlying malaise. Indeed, writing in 2008 just before the onset of the Global Financial Crisis, La Porta et al. compared and contrasted the policy-implementing focus of civil law jurisdictions with the market-supporting focus of common law jurisdictions – to the latter’s advantage. The paper concluded: The world economy in the last quarter century has been surprisingly calm, and...