(Gainesville, Florida, November 17, 2008) The Perth Leadership Institute (
http://www.perthleadership.org/), the industry leader in business acumen assessment and development programs, today announced that it has issued a White Paper examining the impact of corporate governance reforms on financial risk. The White Paper argues that despite the conventional view to the contrary, increased corporate governance as prescribed by the Sarbanes-Oxley reforms did not lead to reduced risk. Rather, it resulted in increased moral hazard, due to people’s belief that the regulation would tame risk, and therefore allowed them to increase risky behaviors. The White Paper concludes that these corporate governance reforms actually led to lower levels of business acumen in the overall financial system since investors, shareholders and corporate managers had less incentive to behave responsibly since they felt the regulations controlled and insured them against risk.
According to Dr. E. Ted Prince, Founder and CEO of the Institute, “The implementation of corporate governance frameworks by companies has dramatically increased, and they have been put into place in the belief that they would reduce general financial risk in the marketplace. The recent credit crisis and current global downturn demonstrate that such frameworks did not succeed in this aim. In fact, corporate governance reforms, while useful in many ways, are fundamentally incapable of completely protecting against systemic risk. High levels of business acumen are thus systematically de-emphasized, and the associated bad financial behaviors eventually lead to system collapse.”
The Perth Leadership Institute has developed innovative approaches to leadership styles and financial impacts based on its research into business acumen. These form part of its business acumen assessment and development programs for managers and executives. It has developed business acumen assessment instruments, such as the Financial Outcome Assessment®, used by executives and managers to increase their financial and valuation impact.
The Perth Leadership Institute was founded in 2002 in Gainesville, Florida, by Dr. E. Ted Prince to carry out research into the linkages between behavior and company financial outcomes. Its programs are targeted at executives and managers and are used for leadership and executive development, talent management and to improve individual and team financial performance at the middle and senior levels of organizations.
To obtain more information, email steven.weiner[at]perthleadership.org or call (352) 333 3768 x718.
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