TY - JOUR T1 - The U.S. Corporate Governance Crisis in Context JF - Special Issues SP - 16 LP - 20 VL - 2003 IS - 2 AU - Holly J. Gregory Y1 - 2003/09/21 UR - https://pm-research.com/content/2003/2/16.abstract N2 - In the past two years we have experienced a “perfect storm” in the confluence of a stock market bubble, tax laws that favored stock-based incentive compensation, increased focus on quarterly earnings and short-term stock market movements, research reports written by conflicted analysts, audits performed by accountants focused on growing their consulting businesses, and our traditional board deference to an imperial CEO. A failure to address these problems could have indicated a failed system and indeed the U.S. system showed strains, but then it corrected quickly. For the most part, the recent reforms remind us of what we have considered all along to be priorities, including accurate books and records; full and fair disclosure; and fiduciary duties of care, loyalty, and good faith. Reforms in countries and regions as diverse as the United States, the European Union, the Russian Federation, and even China, have a remarkably similar emphasis on director independence, clarification of board and audit committee oversight responsibilities, and management accountability for accurate disclosure. While reform efforts are important, as a practical matter, corporate governance has to be exercised by individuals within a perimeter of ambiguity and discretion that is necessary to foster entrepreneurial activity. In the final analysis, investors all over the world must rely on leading businessmen and women to conduct themselves ethically and honestly in the interests of shareholders. ER -