Corporate Governance: Insider Information, the Bane of Financial Melt-Down?

Abstract

Words are not enough to express the global financial melt-down. Is it foreclosure , bad debt, bank failure, tentacles, stock market crash, share nose-diving, investors havoc or suicide or death- trap, government inability, business failure, mortgage failure, Fannie Mae-Freddie Mac phenomenon, bait and switch game, etc; the insider knowledge or information, the scapegoat? This is the problem investigated in this study. Therefore, the hypothesis is that the insider knowledge of the manager does not cause the global financial melt-down. The method is analytical using desk research. The finding is that the insider information possessed by the manager informed the manipulation of firms, securities, risky business, terms, prices, etc, for their benefit to the detriment of investors and therefore caused the financial melt-down. Finally, the major recommendation is that corporate governance needs reforms for tighter control and application of full oversight functions on investment bankers.