The five chapters in Part I explore the failures of corporate governance that contributed to the global financial crisis, with a focus on examining the limitations of the market-oriented approach to corporate governance, which in a broad sense is characterized by deregulation, self-regulation, the market for corporate control and other market discipline mechanisms. Thomas Clarke begins by examining the specifically corporate governance causes of the global financial crisis. He identifies the origins of the crisis in the enthusiasm for deregulation of financial institutions and markets, resulting in the rapid growth of securitization. The huge explosion of global derivatives set the context in which risk management and corporate governance were abandoned by major financial institutions. The rating agencies and executive incentives played roles in encouraging rather than managing risk. He suggests that international efforts to coordinate a regulatory response to the crisis should be considered.

The contributions in this section concentrate on examining the failure of the internal governance system in the financial crisis and exploring how we may address the problems with the role of institutional shareholders, board effectiveness, internal control and risk management. Robert A. G. Monks starts the section with a focus on the complex and conflicting role of institutional shareholders, which has caused the systemic dysfunction of shareholders' rights and responsibilities to monitor the corporation. While there is no genuine commitment to an ownership-based governance system at present, he suggests two main policy initiatives to tackle this issue: the first is enabling effective shareholder engagement in corporate governance through explicit legislation and commitment to enforcement by all branches of government, and the second is encouraging shareholder activism by arrangement for financing ‘activism’ either as an appropriate corporate expense or as a designated portion of the investment management fees.

The contributions in the final part explore and point to new directions for corporate governance research and reforms as a post-crisis agenda. Peer Zumbansen begins by questioning the current functional and ahistorical approach in comparative law and corporate governance research, which is more interested in exploring and designing regulatory responses towards the quick ‘fixing’ of the system failures, without a fundamental understanding of the changing, evolving and increasingly complex nature of the business corporation and its regulatory environment. Examining the evolution of European capital market law and corporate governance harmonization, he recognizes the increasingly multilevel and trans-territorialized norm production in corporate governance as an ephemeral ‘double movement’: the attempted liberation of the national regulatory constraints as required by business globalization on the one side, and the inevitably embedded nature of corporate norms in distinct socio-economic cultures and historically grown legal and institutional frameworks on the other side. Zumbansen argues that the rapid developments of globalization of markets, information technology, knowledge economy and the ‘financialization’ of the corporation have opened up regulatory spaces and transformed formal rule creation in politically embedded state legal systems towards an emerging system of decentralized and specialized transnational regulatory regimes that unfolds in a web of hard and soft laws, which blur the regulatory boundaries between national and international, public and private, formal and informal. This phenomenon is what he calls ‘transnational legal pluralism’, the new embeddedness of the firm.

Since the 1980s, worldwide corporate governance issues have attracted much media attention. Issues like corporate fraud, corporate failure and collapse, abuse of management power, excess of executive remuneration, and corporate social and environmental irresponsibility have all been topical in media reports, public forums, academic debates, governmental policy and regulatory agendas. Nevertheless, many of these corporate governance issues would not have been so prominent and exposed, had it not been for the global financial crisis of 2007–10. Many scholars, policy analysts and corporate practitioners have linked the severity and increasingly circular nature of the financial and economic crisis to corporate governance failures, whether systemic, functional or technical (see details in the following sections). Various corporate governance reforms have taken place in Europe and the United States among other countries (several chapters in this volume mention those reforms).