Financial Crisis Impact On Corporate Governance

1594 Words7 Pages

The Financial Crisis Impact on Corporate Governance
In business, profits or losses is in the normal course of its cycle however, when multiple businesses face the accumulation of wrong management decisions, self-interested management, profits over efficiency and effectiveness and the bad economic situations; a global crisis might occur.
What is meant by financial crisis?
The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics
This is a brief about what happened in 2007 with a lot more of discussions in …show more content…

Corporate Governance has its advantages and disadvantages, and it works like a double-edged sword, as the agency problem indicated in 2007 and 2008 management was interested in its own remunerations and bonuses and forgot how to manage its corporation for the long term and looked for getting their salaries increases by the end of the year. Corporate Governance was implemented in a fraud-full manner, managers deceiving shareholders, board of directors and other related members to the company.
If there was ever a new financial crisis in the horizon, Corporate Governance could help in preventing such crisis. However, corporate governance has shown some weaknesses that are demonstrated …show more content…

This has led to a more broad worry among approach producers and the educated community, with respect to climate motivating force frameworks that are in operation likewise in non-budgetary firms lead to over the top transient administration activities and to "Rewards for Failures". This has been broke down at two levels: at the executive and at the trading function level.
Preventing another financial crisis in the future needs better stricter corporate governance rules and regulations. For corporate governance, ethics, integrity and transparency are key elements when implementing and putting down the rules and regulations, in practice, the regulations are interoperated but the rules are put by a higher authority to achieve maximum output from the corporate governance.
Some of the methods using corporate governance that we suggest to use to prevent the financial crisis are demonstrated

More about Financial Crisis Impact On Corporate Governance

Open Document