Why criminal sanctions still matter in corporate governance

Abstract

The general concern about the adequacy of self-regulation as a mode of policing corporations has once again come to the forefront of the corporate governance debate following the current economic crisis. Irresponsible lending to individuals who cannot afford to repay loans has resulted in the near collapse and nationalisation of banks such as Northern Rock and Bradford & Bingley in the United Kingdom and Fannie Mae and Freddie Mac in the United States.1 Once again, the Government has had to intervene to prevent an economic crisis, by nationalising failing financial institutions to avoid them falling into liquidation.