Towards a New Corporate Governance after the Global Financial Crisis

The global financial crisis has caused many to review the current effectiveness of prevailing corporate governance ideas in many developed countries, such as in the UK, the USA and in the EU more generally. We have seen a move away from a primary focus upon self regulation to a greater resort to government action to shape corporate governance practices. Although the financial crisis mainly affected financial institutions, the lessons gained from the experiences of these institutions in the face of this crisis have been seen to be more generally applicable to listed companies. This has led to the revision of existing Corporate Governance Codes and the drafting of new codes, such as the Stewardship Code in the UK. There has also been a move to strengthen government regulatory structures, such as the abandonment of 'light touch' regulation. We have also seen calls for the use of a wider range of regulatory tools in dealing with corporate governance problems, such as short termism, distorted incentive structures, gatekeeper failure, domineering chief executives, ineffective non-executive directors, docile institutional shareholders and poorly qualified boards. In this paper Roman Tomasic and Folarin Akinbami argue that in the move from old neo-liberal market models we have seen the rise of regulatory capitalism and calls for a corresponding resort to a more effective palette of regulatory measures, collectively described as network regulation. This calls for the mobilization of a wider range of corporate stakeholders to support the achievement of a more effective and a longer term-oriented system of corporate governance. A New Corporate Governance needs to be built on the lessons of the financial crisis so that we do not encounter many of the same problems a decade or so later (as we did after the experience of a decade or so ago, such as the failure of Enron)