Post crisis corporate governance lessons : the case of the US investment banks
The paper analyzes the corporate governance shortcomings identified as the divergence from best practice. It is based on the case studies of three American investment banks Bear Stearns, Lehman Brothers and Merrill Lynch discussing their major corporate governance failures which resulted in the their collapses contributing to the outbreak and course of the financial crisis and leading to significant uncertainty on the stock market. The analysis of Bear Stearns, Lehman Brothers and Merrill Lynch depicts severe corporate governance inefficiencies although the scenarios of each of these investment banks proved to be different - Lehman Brothers collapsed filling for bankruptcy, Bear Stearns was rescued in a takeover transaction by JP Morgan Chase and Merrill Lynch was taken over by Bank of America, while the parent companies of two latter banks being covered by the US bailout scheme known as Toxic Asset Relief Plan (TARP). The identified main corporate governance shortcomings refer to the board composition and work, structuring of the executive compensation as well as risk management. The empirical material allows for the formulation of main corporate governance guidelines. (original abstract)
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