Tag Archives: Moral Hazards


The United States of America is the biggest economy of the world producing twenty one percent of total world output through millions of business firms operating in its territory. It is generally assumed that US human capital is more productive and business firms are more efficient. The US firms have been obtaining efficiency gain vis-à-vis their European and Asian competitive firms. This is claimed to be due to good corporate governance. The objective of this study is to study the level of corporate governance because in spite of being efficient economy there are a large number of corporate failures and corrupt practices. The authors have intended to investigate the causes of corporate governance problems in the United States and their possible solutions. The author used secondary data taken from different relevant Books, Journals and US Bureau of Economic Analysis. The nature of the research is qualitative and as such the author used qualitative tools to study the level of corporate governance. The author founds that US business firms have also been facing agency problem, corrupt practices like inside trading in the capital market and misusing resources despite the fact that the United States have strongly regulatory framework. But this regulatory framework is rigid, having many loopholes, providing opportunity to self-interest-seeking managers to manipulate them. The authors suggest that existing regulatory framework needs to be re-examined to make it flexible, keeping in view rapidly changing corporate environment.

Keywords: Agency problem, Corporate Mis-governance, Moral Hazards