Mike O'Sullivan has said it better than I ever could. I particularly like these first three points:
1. A public company exists for one purpose — to make money. Preferably huge amounts of it, for as long as possible, in a manner that allows its executives and stockholders to sleep at night.
2. If a particular corporate governance reform helps a public company increase its profits, it's good. If a particular corporate governance reform decreases the likelihood that a public company will increase its profits, it's bad.
3. Corporate governance is not an end in itself. A public company with a lousy business and an excellent CGQ rating is still a lousy public company.
and this last point (emphasis mine)
7. Benjamin Graham told us many years ago that the market is a voting machine in the short term, a weighing machine in the long term. A public company with a lousy business has no hope of proving itself over the long-term. A public company with a lousy business can, however, win the market's ever-shifting short-term popularity contests. Especially if its executives are avaricious and the market is deluded by irrational exuberance. The best antidote to avarice and irrational exuberance is for investors to focus on the long-term and stop rewarding companies that play the market's short-term games.
We Americans have come to hate risk and failure so much (even though it is part of capitalism), that every time something happens (9-11, Enron, NorthEast black out, etc.) we will do anything to stop it from happening again, even if it means tying the hands of all the other people who do things correctly. For those of you who don't regularly read The Economist check out this site, click on "winners", then "2002" and read Jack Gordon's essay "Milksop Nation." (I don't know how to link to it directly) It is just over 2 pages, but I think it sums up well the predicament we are in due to our knee jerk reactions to bad events.