AIG faced the most difficult time during the crisis of 2008 when a series of events unfolded with the disclosure of financial losses and subsequent falling stock price. Figure – AIG’s declining stock price during Global Financial Crisis (GFC) AIG’s financial crisis was intensified when its credit ratings were downgraded forcing it to post $14.5 billion in collateral resulting in a liquidity crisis. The U.S. government seized control of American International Group Inc, in an $85 billion deal that signaled the intensity of its concerns about the danger a collapse could pose to the financial system making it one of the biggest corporate bailouts in history. Prior to the crisis AIG enjoyed stability and was rated Aa2 in 2005. The company was downgraded subsequently to an A2 in 2008, A3 in 2009 and Baa1 in 2011.
Corporate Reputation Review, 5(2), 159-174. Retrieved from http://p2048ezproxy.liberty.edu.ezproxy.liberty.edu/login?url=http://search.proquest.com. ezproxy.liberty.edu/docview/231575175?accountid=12085 Provides and gives an understanding of the organizations reputation through interpersonal communication leading to the perceptual judgment of a company's past actions. Definition of corporate reputation is defined as the overall evaluation in which a company is held by its employees. The branding efforts to shape the identity of the organization leads to the distinctiveness of the organizations internal and external audiences.
INTRODUCTION “Corporate Governance is defined as a system of processes and rules by which an organization is directed. This involves controlling the interests of shareholders, management, employees, customers and the society.” Corporate Governance delivers benefits through the ethical framework. Corporate Governance is an antidote to corruption and scandal. Corruption consists of acts committed at a high level that distort policies. Corruption is about the pursuit of profit through appropriate institutions.
Corporate Governance is basically the relationship between shareholders and management board within an institutional framework. There is a strong link between corporate governance and economic development. Good corporate governance leads to high profit which contributes in GDP of the country. Corporate governance is the effective tool to lead the corporate market. Effective corporate governance leads to effective growth of the economy and also provides employment opportunity.
CORPORATE GOVERNANCE Corporate Governance is referred as the process through which power of a corporation is exercised to manage the corporation’s total portfolio of assets and resources for maintaining and increasing shareholder value and satisfy stakeholders of the company. Corporate governance expresses the relationship, structure of rules, and process by which authority controls inner corporations. It encloses the mechanism, in which companies and the people be held to account. The good corporate governance enhances the shareholder morale which is very crucial. It gives the guidelines of how to control the business so that it can achieve its goals as well as also profitable to its shareholder for a long time.
It does require a good communications and relationship between many stakeholders within the institutions or company such as the shareholders, management, customers, suppliers, investors, financiers, government and the community. The confidence of investors in the companies is increases because of good corporate governance and it gives impact positive on overall business environment. The main elements that want to be emphasized within the establishment of corporate governance in company are transparency, trustworthy, moral and ethical environment. These good values are important within the organization of the companies in managing the business operation. Besides, good corporate governance helps to prevent fraud, corporate scandals and misappropriation of money in organizations.
The financial crisis that occurred in 2007 to 2009, likewise known as the Global Financial Crisis or the Subprime Mortgage Crisis, has been considered by many economists to be the world’s worst financial crisis since the Great Depression in the 1930s. The subprime mortgage crisis started off in the United States and the trigger of the crisis was the bursting of the housing bubble which peaked in around 2005 to 2006. This led to a large decline in home prices that had caused increased levels of mortgage defaults and foreclosures. The growth of such mortgage debts industry was financed with mortgage-backed securities (MBS) and collateralized debt obligations (CDO) which were greatly backed by credit worthy and reputable financial intermediaries.
The term ‘Governance’ is obtained from the word ‘Gubernate’ which means to direct or to steer. Therefore, term Corporate Governance would along these lines mean guiding of an association in smooth and fitting way and which is fundamentally done by the top managerial staff and by the administering body. Subsequently, the obligation to guide essentially lies with the directors. Corporate governance has accomplished importance in the late years everywhere throughout the world. The two essential variables that have lead to fast improvements in the fields are specifically, the globalization of financial markets and event of different corporate outrages like Enron Scandal, World Com and Satyam, which have made good Corporate governance a trendy
And corporate governance one of the advantages is that benefits are measurable. Good corporate governance to ensure higher market valuations. Initiatives should be ensuring the control and management of corporate governance the Board of Directors to take the necessary steps, in line with the best interests of the company 's business. High Level Of
Corporate Governance: Corporate Governance is the means by which company is operated and controlled. These are the rules, processes and practices by which a company is directed. Corporate governance basically is the balancing of interests of a company’s stakeholders, such as shareholders, suppliers, customers, government, financiers and the community. In today’s business world corporate governance is a centre of attention because large number of stakeholder’s wealth is at stake. Without strong corporate governance it is difficult for the business to survive.