The dark but wise words of Winston Churchill remind us to ‘never let a good crisis go to waste’. Churchill’s quip has been referred to on numerous occasions in the wake of the global financial crisis, as both policymakers and market participants sought to learn the lessons that stemmed from poor governance and risk management practices at both the micro and the macro levels of the economy.
The emissions testing scandal at Volkswagen, one of the world’s leading automotive companies, provides a more recent example of a crisis where there are lessons to be learned about the pernicious effects that a weak corporate culture and dubious business ethics can have on companies – and ultimately their investors.
It does not require a scholar of corporate governance to observe that Volkswagen’s complex ownership and governance structure – mixing family and state ownership – presented a number of conflicts and questions of alignment of interests between the company, its minority shareholders and other stakeholders.
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