Foreign Policy Research Institute A Nation Must Think Before it Acts Disorganized Crimes: Why Corporate Governance and Government Intervention Failed, and What We Can Do About It

Disorganized Crimes: Why Corporate Governance and Government Intervention Failed, and What We Can Do About It

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Disorganized crimes – outbreaks of corporate misgovernance which grow out of the inherent conflict of interest between managers and shareholders are no new thing. Economists since Adam Smith have been aware of the dilemma of having professional managers in charge of ‘other people’s money’. However, neither current corporate governance practices nor government regulation have prevented major financial fiascos arising out of this conflict. In the last episode (the Credit Crisis of 2007-2009), disorganized crimes nearly collapsed the global financial economy.