Final answer:
The assertion that corporate governance issues have diminished in importance is false. Failures in corporate governance, as illustrated by the Lehman Brothers collapse, underscored the need for rigorous frameworks to oversee company executives and financial practices, making it a focal point of concern.
Step-by-step explanation:
The statement that corporate governance issues have become less important to the financial community during the first decade of the new millennium is false. Corporate governance refers to the mechanisms, processes, and relations by which corporations are controlled and directed. It encompasses the systems by which companies are operated and managed, with the role of ensuring that entities act in the best interest of shareholders and other stakeholders.
A critical example of a failure in corporate governance is the case of Lehman Brothers, where the lack of proper oversight by the board of directors, ineffective auditing processes, and insufficient engagement by large investors culminated in the firm providing inaccurate financial information, contributing to its collapse and the subsequent global financial crisis of 2008. Thus, rather than becoming less important, corporate governance has been under increased scrutiny, and the need for effective governance has been more widely recognized.
Institutions within corporate governance include the board of directors, the auditing firm hired by the company, and large outside investors like pension funds or mutual funds. In the context of Lehman Brothers, these institutions failed to function properly, underlining the significance of strong corporate governance measures.