ABSTRACT
With the corporate world and the whole financial system rocked by revelations of conflict of interest, undue political influence, malfeasance, negligence, frauds, and greed, new ideas need to be advanced to save the free market system (Emmons, 2003). This, the most ingenious system mankind has ever invented, is calling for reform. Venturing any serious prediction of the consequences of continuing crisis will surely prove to be hazardous, but one can wonder if the current crisis is not actually an unprecedented systemic failure; for this reason most observers are taken aback by the turn of events and are jaw dropped in astonishment. There is, however, a general consensus that the amplitude of the disaster requires a broader approach, and that it is important to think of what lessons should be learned for the future. We show in this book that corporate governance should be looked at as a systemic issue, rooted in human values—a form of puzzle having some of its components anchored in the organization, while others are originating from outside it and corporations are but mirrors of the conditions prevailing in society. When organizations are appropriately governed, it is suggested that the entire financial system of governance will be operating efficiently and the reverse occurs in a contrary situation. One thing is clear: the actual crisis is seriously endangering the free market economic system by establishing a bona fide crisis of confidence and “historically, such a crisis has been proven to be extremely dangerous” (Moss, 2008). Unfortunately, analysis about governance crisis has frequently concentrated more efforts on the damages of the problem than on the possible cures or origins, and “thus, rather than advocating robust solutions, they tend to provide narrow answers to the identified problems” (Thomas, 2008). We tend to think of the current governance crisis as a detailed, uncontrollable force that no one understands, although this is actually a direct consequence of a specific decision-making process adopted by people who were individually making decisions to approve, pass on, and cover fraudulent transactions.
