THE FINANCIAL CRISIS AS A FAILURE OF CORPORATE GOVERNANCE
THE FINANCIAL CRISIS AS A FAILURE OF CORPORATE GOVERNANCE

Summary/Abstract: This paper presents a review of the literature on the role of financial globalization in the changing governance practices. da Silveira and Dias Jr. try to measure the impact of the announcement of bad corporate governance news, and point out the relevance of the media in promoting better corporate governance practices. Dong and Xue select six governance variables to describe the internal governance environment: (1) number of special committees, (2) proportion of independent directors, (3) board size (4) separation of chairman versus CEO (5) salary ratio of board members and (6) local government influence. Elbannan examines the association between internal control quality and firm credit rating, and the characteristics of firms receiving investment versus speculative rating grade: internal control quality decrease the likelihood of a firm receiving an investment-grade debt rating. Arvedlund claims that Madoff relied on fund-raisers and feeder funds to build his client base. Markopolos claims that if Madoff was using a split-strike strategy, his reported returns could not come from the performance of the market.

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