**2.1 Does corporate governance "cause" the financial crisis**

Walker's review [11] showed that the moral failure and inadequacy of corporate governance mechanisms in the global financial system contribute to the financial crises.

In this vein, Minton [12], Lemmon and Lins [13], and Baek et al. [14] found that a certain degree of corporate governance is effective regarding the stock price reduction in the event of a financial crisis. However, risk is another important factor on which investors base their investment. Therefore, Huson et al. and Choi et al. [15, 16] stated that higher ratio of independent directors is expected to have a positive effect on corporate performance. Huang et al. [17] believe that the independent board can help reduce the stock market volatility. They divide the sample into two groups regarding whether the firm appoints independent directors and investigate the effect of independent directors on stock price volatility.

Burcu et al. [18] showed that the interaction of ownership structures and stock prices differ from period to period. They indicated the positive relation between inside ownership structure and stock price in the periods January 2008 and March 2009; a negative relationship is observed during the periods between October 2008 and January 2009. The strong negative relation is monitored between largest ownership, concentrated ownership, and stock prices.

Steven [19] uses a variety of econometric models, including feedback, to test the robustness of (dynamic panel estimations) and to examine the relationship between the board's characteristics and foreign ownership. They showed that the outside directors have important role in the stabilized stock price volatility.
