Extended bull markets can encourage risky and improper corporate behavior . A lack of a legitimate board of directors undermines governance, while dual-class stock structures concentrate power and reduce oversight. Avoiding audits and presenting financial data uniquely can hide problems. Unusual corporate locations and overlapping corporate interests are red flags.

Understanding red flags in corporate governance is crucial for investors to avoid potential fraud and failures. Recognizing signs of poor governance and risky practices enables more informed decision-making, safeguarding investments and promoting healthier corporate environments. This knowledge is especially pertinent during market optimism, when such issues might be overlooked.