Final answer:
The false statement regarding Volkswagen's corporate governance failure is that it had a 'strong independent board of directors.' In reality, VW's governance issues included a lack of risk awareness with 'defeat devices' for diesel engines, improper executive compensation, and insufficient monitoring of senior executives. These failures resemble the corporate governance lapses seen in Lehman Brothers' collapse.
Step-by-step explanation:
The question provided relates to corporate governance failures at Volkswagen. The correct answer is 'c) A strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions.' This option is incorrect because Volkswagen's board was criticized for not being independent or strong enough to oversee executive actions properly. Instead, there were failures due to a lack of understanding of the risks associated with installing 'defeat devices' to cheat emissions tests, which were applied to diesel engines in at least 11 million VW vehicles. Additionally, there were issues with executive compensation and inadequate monitoring of key figures such as the Chairman and CEO.
To understand corporate governance failures, we can look at the example of Lehman Brothers. The Lehman Brothers scenario demonstrated a lack of oversight by the Board of Directors, which failed to prevent management from taking excessive risks, and an Executive Compensation Committee that focused on short-term gains without proper risk consideration. The Board also lacked the necessary financial service experience and paid little attention to operational details, contributing to the company's failure. Corporate governance institutions, including the Board of Directors, auditing firms, and outside investors, failed to provide accurate financial information, leading to Lehman Brothers' bankruptcy.