Corporate Governance in Australia

Corporate Governance in Australia

Corporate Governance in Australia

Introduction

Corporate governance is geared toward ensuring that companies take responsibility for directing and controlling their affairs in a manner that is fair to their stakeholders. Two qualifications however need to be added immediately. First, this responsibility can either be taken voluntarily by the boards of directors of companies or it can be imposed on them by regulating authorities or by a combination of both. Second, the scope of stakeholders toward whom the company should be responsible is a contested issue in corporate governance, as some corporate governance regimes restrict these stakeholders almost exclusively to shareholders, while other corporate governance regimes are much more inclusive with regard to stakeholders who fall within the ambit of corporate responsibility.

Themes

To get a global perspective on the relation between business ethics and corporate governance, the world was divided into six regions, namely, Africa, Asia-Pacific, Europe, Japan, Latin America, and North America. A team of researchers was then compiled to carry out the research in their respective regions. Although they had the liberty to decide on the format of their research reports, they were nevertheless all required to reflect in their reports their findings on the following themes:

Theme 1: Different forms of business governance

1. Is there a dominant model of corporate governance in a region, or are there competing models of governance?

2. If the latter, what are the most prominent differences between these models?

Theme 2: The span of stakeholder engagement

1. Do the existing models of corporate governance compel companies to engage with stakeholders?

2. Who are the stakeholders that they have to enlist with?

Theme 3: The function of enterprise ethics in corporate governance

1. Do the existing models of corporate governance refer explicitly to business ethics?

2. If so, what function is ascribed to enterprise ethics?

Conceptions of the Corporation

How corporate governance is perceived depends largely on how a corporation is conceived. The notion of what a corporation exists for will determine for whose sake it is governed and thus will prioritize stakeholders of the corporation accordingly. It will also determine how the moral nature and ethical obligations of a corporation are perceived. In the articles that follow, it is clear that there a number of different conceptions of the modern corporation. The theoretical conceptions of the firm vary from agency theory to stakeholder-theory conceptions, with some intermediate conceptions in between.

In between the extremes of agency theory and stakeholder theory are conceptions of the firm that emphasize that the corporations do not exist for the sake of one or more specific group of stakeholders but is an entity in its own right that exists for a specific organizational purpose. A variety of such organizational purposes can be distinguished, including those premised on transaction cost theory, organizational theory, and communitarian theory. The appropriate governance model is then determined in terms of the specific purpose that the firm is supposed to serve. Governance models premised on such conceptions of the firm are likely to include a variety of stakeholders; however, their interests will enjoy ...