engleski

Crisis of corporate governance: review of reforms in the aftermath of global financial crisis

The goal of this conceptual paper is to present, summarize and assess prominent proposals from the literature regarding reform and regulation efforts, improvements and implications of changes on corporate governance practices in the aftermath of the recent global financial crisis, which exposed certain severe corporate governance problems, and resulted in numerous emerging corporate governance reform proposals. In the light of various proposals, there is no one solution fits all blueprint of measures intended for all firms which can provide general corporate governance improvements, due to the significant existing differences in the regulations among countries, as well as between financial and non- financial industries which are differentiated by regulatory discrepancy and risk incentives. This paper assumes a theoretical approach by reviewing the literature on corporate governance and discusses the identified anticipated changes in four major corporate governance sub fields: board effectiveness, risk management, manager’s remuneration and accountability, and board’s relations with shareholders and stakeholders. Firms with adequate corporate governance are posited to perform above average and are able to reduce their cost of capital ; hence good corporate governance is vital for the survival of the firms in times of crisis and in attaining competitive advantage. It should be noted that corporate governance does not present an end to itself, but rather it is one of the enabling elements which facilitates improvements in the corporate performance and is in crisis times viewed as an asset. Special focus is on financial firms, where investors now demand improved corporate governance standards and transparent management practices in order to make their investments sounder. The article aims to contribute to a growing literature in the field through analyzing corporate governance reforms which should strengthen the corporate governance practices and provide guidelines and strategies in response to preventing future economic crises.

corporate governance reforms; global financial crisis; literature review

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