Did the Global Financial Crisis Reveal a Failure of Corporate Governance Systems - Coursework Example

The entire findings throw light on the lack of corporate governance on reforms, disclosure, regulations, banking sector failures, and so on.

The essay presents the different areas related to it and also highlights the importance being laid to corporate governance now in the evolving times. This thus helps to understand the pattern that is prevalent and also presents a picture for the future development of all economies. Background of the crisisThe prime reason for the crisis is attributed to the lack of corporate governance. The crisis started from the bubble burst and slowly engulfed the entire globe and corporate governance emerged as the biggest problem out here.

With boundaries disappearing among countries the effect passed on. This impacted the growth rate and made the economy take a dip. This resulted in the growth rate being negative and giving rise to unemployment. The crisis started when “prices of assets started falling continuously thereby decreasing consumption expenditure which led to the postponement of capital expenditure, resulting in more unemployment and finally leading to contraction”. This impacted “financial institutions and banks as it led to liquidity crunch” creating a serious situation.

This is evident from the failure of Enron which failed to ensure corporate governance in its work. Some of the factors which have contributed to it are lack of reforms, improper disclosure, lack of policies, and over-reliance on certain sectors. Also, the situations that banks had to face and the ignorance y banks on the corporate governance perspective contributed to the crisis. The paper further looks into the reasons and the manner corporate governance was ignored which finally led to a crisis of such a magnitude.

Reasons leading to the global crisis and lack of governanceThe paper now examines various reasons which lead to the global financial crisis and throws light on how corporate governance was given the least importance which lead to the crisis. Lack of proper reforms and measures to ensure disclosure and principles could be seen as a reason which led to such a crisis. Improper risk management strategies and measures to safeguard against excessive risk highlight the lack of governance policy.