Assignment Topic

In the global financial crisis of 2008 the spotlight was on ‘corporate governance', that is, how companies are regulated by governments and how they are managed internally. At that time Australia's regulatory system and the way Australian financial institutions managed their businesses were considered to be one of the reasons Australia was in a relatively good position to withstand the crisis.

Yet in 2018 the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (‘the Royal Commission’) is conducting hearings and considering the conduct of some of these same Australian financial institutions (banks and other financial service providers), including their compliance with both Australian law and community standards, together with the sufficiency of the current Australian legal and regulatory structure.

Required

A. Choose a company that is currently listed on the Australian Stock Exchange and whose conduct is being considered by the Royal Commission mentioned above. Discuss whether your chosen company adheres to the principles of good corporate governance. Give reasons for your answer, including examples of good or poor corporate governance exhibited by your chosen company.

AND B Discuss the possible legal, social, economic and political consequences that may follow where those making decisions on behalf of the company you have chosen above fail to observe good corporate governance principles. In your response you must identify and discuss two theories that drive views on corporate governance

Further explanation and hints:

One of the most important aspects of good (or poor) corporate governance is that of directors’ duties. You should discuss this in relation to the company that you have chosen and discuss at least one other aspect of corporate governance. Some aspects are listed below, but you may also identify and choose other aspects of corporate governance.

(a) ASX Corporate Governance Council Corporate Governance Principles and Recommendations

(b) independence of auditors

(c) continuous disclosure

(d) shareholder rights and remedies

You may be able to find information on the website of your chosen company about its corporate governance, its constitution (sometimes) and its annual reports. These resources can all be useful in determining how the decision makers of your chosen company view corporate governance and how well the principles are observed. It is may be useful to look at Australian newspapers. These may provide opinions on the corporate governance of your chosen company. Many of these publications may be available online.

To answer question B, you will need to think about what good corporate governance means, why the corporate governance principles are considered important by organisations such as the ASX, and the implications should the decision makers of your chosen company fail to adhere to them. You should be able to at least explain the two theories that drive views on corporate governance as your understanding of those will shape your views on implications of non-adherence to corporate governance principles.

This assignment requires you to do significant independent research. In this regard, you may find the Library’s databases useful. You should appropriately reference your assignment, including in the text of your assignment or as footnotes, and provide a reference list or bibliography at the end of your assignment.