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1. The ‘United States approach’ 
Dempsey, Alison L., editor and Alison L., editor
- Evolutions in Corporate Governance: Towards an Ethical Framework for Business Conduct. 2013 Nov 01 1(1):53-63
Evolutions, Corporate, Corporations, Governance, Ethics, Business, Standards, Conduct, Principles, Regulatory, and Regulation
In a world where the implications and consequences of corporate actions and decisions are potentially far-reaching and lasting, ethical standards – their observance and their breach – must be part of the language of business conduct, whether in the context of corporate transgressions, regulatory effectiveness, terms of engagement between business and their stakeholders, or the metrics used by investors in assessing performance and risk and understanding long-term value.This critically important book proposes a new paradigm for understanding, developing and maintaining standards of corporate governance. Its point of departure is not a position along the diverse paths of traditional corporate governance and regulatory theory, law and practice, nor specific questions of how to institute, implement and observe policies and practices that function as proxies for good governance. Instead, it starts with the idea of framing governance generally, and corporate governance specifically, as a matter of conduct that is guided by a set of fundamental ideals and principles. Evolutions in Corporate Governance attempts to answer the wider question of how to re-imagine a framework within which 'good' corporate governance – that takes account of and is responsible for the social, environmental, ethical as well as legal and economic dimensions of business conduct – is addressed alongside issues of profitability and competition, in the face of forces of globalization and business influence that are testing the limits of what can be accomplished by traditional law and regulation. Dempsey contends that meaningful change in behaviour will only come when there is a corporate governance framework that explicitly encompasses both law and ethics.
Unlike the British model, much of what is considered to be regulation of the corporate governance of corporate entities in the United States is effected indirectly through the regulation of securities markets pursuant to federal securities law. This distinction is important in locating the appropriate authority for matters of corporate governance when considering and comparing different jurisdictional practices. It is also critical to understanding the fundamental distinction between corporate governance as constitutive and relatively uncontested, as in the British model, and corporate governance as additive and consequently contested as it is in the United States.The departure from the British model resulted from a constitutional divide between federal and state law that prevented Congress in 1930 from adopting a federal model of incorporation that reflected in full the British Companies Act 1929 despite the desire and intention to do so. The United States Supreme Court confirmed the original legislators’ intention to follow the British model in its judgement in Gustafson v. Alloyd Co. 513 U.S. 561 (1995). Supreme Court Justice Kennedy, regarding the proper basis for interpreting the civil liability provisions of the Securities Act 1933, ss. 11 and 12, stated ‘[F]ar from suggesting an intent [sic] to depart in a dramatic way from the balance struck in the British Companies Act, the legislative history suggests an intent to maintain it’.Instead, Congress proceeded with an accommodation of federal and state constitutional jurisdiction in the form of the 1933 Securities Act that seeks to regulate the governance of companies indirectly by means of direct regulation of the sale of securities. That is, using the federal jurisdiction over the market for the sale and exchange of securities, as a means to attach corporate governance requirements as between offerer and purchaser of shares.
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2. The financial services industry and society: The role of incentives/punishments, moral hazard, and conflicts of interests in the 2008 financial crisis 
Murray, Noel, Manrai, Ajay K, and Manrai, Lalita Ajay
- Journal of Economics, Finance and Administrative Science. December 2017 22(43):168-190
BUSINESS, BUSINESS, FINANCE, ECONOMICS, MANAGEMENT, and Society
Purpose - This paper aims to present an analysis of the role of financial incentives, moral hazard and conflicts of interests leading up to the 2008 financial crisis. Design/methodology/approach - The study’s analysis has identified common structural flaws throughout the securitization food chain. These structural flaws include inappropriate incentives, the absence of punishment, moral hazard and conflicts of interest. This research sees the full impact of these structural flaws when considering their co-occurrence throughout the financial system. The authors address systemic defects in the securitization food chain and examine the inter-relationships among homeowners, mortgage originators, investment banks and investors. The authors also address the role of exogenous factors, including the SEC, AIG, the credit rating agencies, Congress, business academia and the business media. Findings - The study argues that the lack of criminal prosecutions of key financial executives has been a key factor in creating moral hazard. Eight years after the Great Recession ended in the USA, the financial services industry continues to suffer from a crisis of trust with society. Practical implications - An overwhelming majority of Americans, 89 per cent, believe that the federal government does a poor job of regulating the financial services industry (Puzzanghera, 2014). A study argues that the current corporate lobbying framework undermines societal expectations of political equality and consent (Alzola, 2013). The authors believe the Singapore model may be a useful starting point to restructure regulatory agencies so that they are more responsive to societal concerns and less responsive to special interests. Finally, the widespread perception is that the financial services sector, in particular, is ethically challenged (Ferguson, 2012); perhaps there would be some benefit from the implementation of ethical climate monitoring in firms that have been subject to deferred prosecution agreements for serious ethical violations (Arnaud, 2010). Originality/value - The authors believe the paper makes a truly original contribution. They provide new insights via their analysis of the role of financial incentives, moral hazard and conflicts of interests leading up to the 2008 financial crisis.
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