TAILIEUCHUNG - The Corporate Governance Lessons from the Financial Crisis

As the Baby Boomers begin to retire, their many trillions of dollars of savings and investments are shifting from accumulation to decumulation, making the ideas and techniques described in Lifetime Financial Advice timely and necessary. We hope and expect that researchers will continue to follow this path in the future by placing a much greater emphasis on life-cycle finance than in the past. We intend that upcoming Research Foundation monographs will reflect the heightened emphasis on life-cycle finance. The present monograph is an unusually complete and theoretically sound compendium of knowledge on this topic. We are excep- tionally pleased to present it | ISSN 1995-2864 Financial Market Trends OECD 2009 Pre-publication version for Vol. 2009 1 The Corporate Governance Lessons from the Financial Crisis Grant Kirkpatrick This report analyses the impact of failures and weaknesses in corporate governance on the financial crisis including risk management systems and executive salaries. It concludes that the financial crisis can be to an important extent attributed to failures and weaknesses in corporate governance arrangements which did not serve their purpose to safeguard against excessive risk taking in a number of financial services companies. Accounting standards and regulatory requirements have also proved insufficient in some areas. Last but not least remuneration systems have in a number of cases not been closely related to the strategy and risk appetite of the company and its longer term interests. The article also suggests that the importance of qualified board oversight and robust risk management is not limited to financial institutions. The remuneration of boards and senior management also remains a highly controversial issue in many OECD countries. The current turmoil suggests a need for the OECD to re-examine the adequacy of its corporate governance principles in these key areas. This report is published on the responsibility of the OECD Steering Group on Corporate Governance which agreed the report on 11 February 2009. The Secretariat s draft report was prepared for the Steering Group by Grant Kirkpatrick under the supervision of Mats Isaksson. FINANCIAL MARKET TRENDS - ISSN 1995-2864 - OECD 2008 1 THE CORPORATE GOVERNANCE LESSONS FROM THE FINANCIAL CRISIS Main conclusions The financial crisis can be to an important extent attributed to failures and weaknesses in corporate governance arrangements Qualified board oversight and robust risk management is important The OECD Corporate Governance Principles in these key areas need to be reviewed This article concludes that the financial crisis can be to an .

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