Cycles of Crisis and Regulation: the enduring agency and stewardship problems of corporate governance

Corporate governance crisis and reform is essentially cyclical. Waves of corporate governance reform and increased regulation occur during periods of recession, corporate collapse and re‐examination of the viability of regulatory systems. During long periods of expansion, active interest in the conformance aspects of governance diminishes, as companies and shareholders become again more concerned with the generation of wealth, rather than in ensuring governance mechanisms are working appropriately for the retention of wealth, and its use for agreed purposes. This cyclical historical saga revolves around the enduring agency and stewardship dilemmas of governance. Complacency concerning corporate governance during confident times compounds ensuing crises. Such dilemmas are universal in market systems, though internationally with different systems of corporate governance the unwinding of this saga has occurred at different times, for different reasons, and with different consequences. Corporate governance is about wealth generation and risk management, and these duties require continuous and simultaneous performance. Avoiding mandatory restrictive over‐regulation requires active market regulation, particularly at times of expansion. The drive to make corporate governance both improve corporate performance and enhance corporate accountability will continue.