Literature Review on Corporate Governance and the Recent Financial Crisis

Abstract

This paper seeks to summarize a stream of research that has previously explained how failures in corporate governance contributed to the global financial crisis. More precisely, it reviews how the current corporate governance systems failed to safeguard against aggressive risk taking, identifies gaps in the literature, and highlights the most promising future directions for this topic. In this paper, I review the literature that identifies corporate governance failures, attributes that contributed to the financial crisis, the impact and magnitude of these failures, and the recommendations that have been offered to correct the identified failures. This paper’s main contribution is to summarize previous research. The outcomes of this paper is important to scholars who are interested in studying corporate governance and 2007-2008 financial crisis as it provides a thorough explanation of the relationship between corporate governance and the recent financial crisis.

Keywords: Financial Crisis, Corporate Governance, Risk Management