Lehman Brothers shows.

CLEAR IT UP

How did lack of corporate governance lead to the Lehman Brothers failure?
In 2008, Lehman Brothers was the fourth largest U.S. investment bank, with 25,000 employees. The firm had been

in business for 164 years. On September 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection.

There are many causes of the Lehman Brothers failure. One area of apparent failure was the lack of oversight by the

Board of Directors to keep managers from undertaking excessive risk. We can attribute part of the oversight failure,

according to Tim Geithner’s April 10, 2010, testimony to Congress, to the Executive Compensation Committee’s

emphasis on short-term gains without enough consideration of the risks. In addition, according to the court

examiner’s report, the Lehman Brother’s Board of Directors paid too little attention to the details of the operations

of Lehman Brothers and also had limited financial service experience.
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