Financial Crisis and Corporate Governance Reform-A Study of Risk Management and Incentive Mechanism

Corporate governance must be reformed accordingly under the pressure of global financial crisis. It is a selection problem in practice, as well as a proposition which is worth to be studied deeply to get a reply. This paper studies such a topic based on the theories of risk management and incentive mechanism and draws a conclusion that poor risk management and unreasonable incentive mechanism are responsible to this mess. Therefore, it is promoted that the reform of corporate governance must breakthrough the above two aspects and a sound risk management and science incentive compensation mechanism are necessary during the reform of corporate governance.