Title: Challenging the role and duty of directors in high profile corporate failures in the USA and Europe in the wake of financial crisis - possible allegations against board of directors for breach of duty of care, skill and diligence?
Authors: Mina W.M. Yip
Addresses: The Open University of Hong Kong, 8/F, Block A, 30 Good Shepherd Street, Ho Man Tin, Kowloon, Hong Kong
Abstract: This paper examines whether the directors' breach of duty of care, skill and diligence could be the direct causation of the four selected corporate failures that had marred in the first decade of 21st century: Enron and WorldCom in the USA and Royal Ahold or currently known as Ahold (Netherlands) and Parmalat S.p.A. (Italy) in Europe. The findings suggest that the establishment of directors' misconduct in duty for corporate management for direct causation of breach of duty of care, skill and diligence should be strengthened and no directors in any jurisdictions shall enjoy immunity from such breach of duty. This study sheds light upon the means of protecting the stakeholders in the company and upon the means of private enforcement of the director's breach of reasonable standard of care for the company, of which not many directors are fully aware of.
Keywords: corporate failures; directors; breach of duty; reasonable standard of care, skill and diligence; causation; director role; director duty; United States; USA; Europe; financial crisis; Enron; WorldCom; Royal Ahold; Parmalat; corporate management; stakeholder protection.
EuroMed Journal of Management, 2015 Vol.1 No.1, pp.70 - 91
Available online: 19 Oct 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article