Corporate governance refers to the administration, internal oversight, and executive actions of a corporation. In the wake of accounting scandals in 2000 and 2001, at companies such as Enron, Tyco, and WorldCom, governance became a major regulatory issue. In 2002, the U.S. Congress passed the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley Act), which established and enhanced governance standards in corporate boards, management and accounting firms.
Subsequent to thefinancial crisis of 2007-08, corporate governance re-emerged. Lax risk management, oversight, and accounting standards among financial entities have been blamed for the near-collapse of the financial system.
Since 2008, regulatory bodies around the world have proposed and begun to implement changes in the governance structure of financial entities, including:
- The Dodd-Frank Act in the U.S., which has mandated that the CFTC and SEC create and implement rules on corporate governance;
- The European Securities and Markets Authority (ESMA) in Europe; and
- The Financial Services Authority (FSA) in the U.K.
- Sarbanes-Oxley Act of 2002. SEC.
- The Corporate Governance Lessons from the Financial Crisis. OECD.
- U.K. Shakes Up Bank Regulation. The Wall Street Journal.