FINANCIAL CRISES

Financial crisis

Financial Crises

Defining Corporate Governance

In its broadest sense, corporate governance is to maintain the balance between economic and social objectives between individual and community objectives. The governance framework is established to promote efficient use of resources and, equally, to require accountability for the management of these resources.

Its purpose is to achieve the highest possible degree of coordination between the interests of individuals, businesses and society overall, thus striking the right balance. The incentive for companies and their owners and managers to adopt management standards accepted internationally is that they will help you achieve your goals and attract investment. For the case in the United Kingdom, while many companies were fearful of the problems and situations associated with corporate governance, however, not much impact and casualty was experienced by the companies and sectors in the country.

Corporate governance is the set of instruments and institutions, which ensures that the interests of the owner or shareholder of the company are proudly made by staff managers (led by the president) of the company. Depending on the tradition of economic and legal principles, there are different models of governance (Silk, 1978, pp. 66).

The emergence of corporate governance is given because of the responsibility with the boards and audit committees to provide security on the reliability of financial reporting, as it has been shown that the higher the quality of corporate governance greater reliability financial reporting; the more supervised and more independent members have the company on board, the less fraud committed.

Corporate governance and financial crisis

To skim through available literature and scripts shown in the context of United Kingdom, many a loopholes and casualties have been intended and portrayed due to the gap of corporate governance and financial crises. One must understand that while corporate governance tends to cover all problems and create a rather 'synergetic' environment, it must be understood and comprehended that in the real, business world, constant assurance, scrutiny and investigation should take place in order for corporate governance to take full control over organizational progression and business transactions (Silk, 1978, pp. 66).

There are countless contributions designated to describe what should be a good model of governance of large corporations that function and transact in the United Kingdom. However, the kind of casualties experienced in different industrial sectors of UK needs to analyzed from a 360-degree perspective, which would ultimately yield and help us identify the gap, which lead to the development and occurrence of the infamous smash, the financial meltdown of 2007-2008 (Schneper, 2004, pp. 263).

While companies have been in the process of constantly adopting and creating the best and most effective business practices, adoption of corporate governance and its practice is not the single handed factor that has led to companies' success and long-term sustainability. Before the concept even emerged, different varieties of strategies and tactics, tools and techniques, methods and methodologies have been adopted by companies, which have now gained worldwide recognition.

Impact of the smash of 2007-2008 on industries in the United Kingdom

While major companies ...