An analysis of the nature and effectiveness of corporate governance in smaller listed Australian companies

The objective of this thesis is to investigate the corporate governance attributes of smaller listed Australian firms. This study is motivated by evidence that these firms are associated with more regulatory concerns, the introduction of ASX Corporate Governance Recommendations in 2004, and a paucity of research to guide regulators and stakeholders of smaller firms. While there is an extensive body of literature examining the effectiveness of corporate governance, the literature principally focuses on larger companies, resulting in a deficiency in the understanding of the nature and effectiveness of corporate governance in smaller firms. Based on a review of agency theory literature, a theoretical model is developed that posits that agency costs are mitigated by internal governance mechanisms and transparency. The model includes external governance factors but in many smaller firms these factors are potentially absent, increasing the reliance on the internal governance mechanisms of the firm. Based on the model, the observed greater regulatory intervention in smaller companies may be due to sub-optimal internal governance practices. Accordingly, this study addresses four broad research questions (RQs). First, what is the extent and nature of the ASX Recommendations that have been adopted by smaller firms (RQ1)? Second, what firm characteristics explain differences in the recommendations adopted by smaller listed firms (RQ2), and third, what firm characteristics explain changes in the governance of smaller firms over time (RQ3)? Fourth, how effective are the corporate governance attributes of smaller firms (RQ4)? Six hypotheses are developed to address the RQs. The first two hypotheses explore the extent and nature of corporate governance, while the remaining hypotheses evaluate its effectiveness. A time-series, cross-sectional approach is used to evaluate the effectiveness of governance. Three models, based on individual governance attributes, an index of six items derived from the literature, and an index based on the full list of ASX Recommendations, are developed and tested using a sample of 298 smaller firms with annual observations over a five-year period (2002-2006) before and after the introduction of the ASX Recommendations in 2004. With respect to (RQ1) the results reveal that the overall adoption of the recommendations increased from 66 per cent in 2004 to 74 per cent in 2006. Interestingly, the adoption rate for recommendations regarding the structure of the board and formation of committees is significantly lower than the rates for other categories of recommendations. With respect to (RQ2) the results reveal that variations in rates of adoption are explained by key firm differences including, firm size, profitability, board size, audit quality, and ownership dispersion, while the results for (RQ3) were inconclusive. With respect to (RQ4), the results provide support for the association between better governance and superior accounting-based performance. In particular, the results highlight the importance of the independence of both the board and audit committee chairs, and of greater accounting-based expertise on the audit committee. In contrast, while there is little evidence that a majority independent board is associated with superior outcomes, there is evidence linking board independence with adverse audit opinion outcomes. These results suggest that board and chair independence are substitutes; in the presence of an independent chair a majority independent board may be an unnecessary and costly investment for smaller firms. The findings make several important contributions. First, the findings contribute to the literature by providing evidence on the extent, nature and effectiveness of governance in smaller firms. The findings also contribute to the policy debate regarding future development of Australia’s corporate governance code. The findings regarding board and chair independence, and audit committee characteristics, suggest that policy-makers could consider providing additional guidance for smaller companies. In general, the findings offer support for the “if not, why not?” approach of the ASX, rather than a prescriptive rules-based approach.

Directing Democracy : The Case of the John Lewis Partnership

The John Lewis Partnership was founded in 1929 as an “experiment in industrial democracy” (Lewis, 1948). This thesis explores the meaning of democracy in the Partnership and examines the wider implications of the case. It argues that democracy in work should be viewed as something which is intrinsically valuable because of its connection to furthering justice, equality, freedom and the rights and interests of all workers. The thesis makes three main contributions. Firstly, the production of a historically situated exploration of democratic participation in the John Lewis Partnership – the largest co-owned business in the UK. Secondly, an analysis of power relations in the organisation and an examination of the ways in which disciplinary power and regimes of truth both constrain democratic practice and offer the potential for resistance and challenge. Thirdly, the thesis challenges critics of the Partnership who have dismissed it as a form of “pseudo democracy” (Pateman, 1970: 73) and “suffocatingly paternalistic” (Ramsay, 1980: 52). Despite the constant threat of degeneration and dilution of the value framework laid down by the founder, the Partnership’s continued commitment to democratic participation provides an important contribution to our understanding of co-ownership and democratically organised forms of work. The analysis shows that management have attempted to direct and define democracy in a highly constrained way, assigning it an instrumental purpose, and privileging the ‘business case’ for democratic engagement. However, the study emphasises that the meaning of democracy is heavily contested and fraught with contradictions and paradoxes. This creates a space in which understandings of equality, solidarity and democracy are debated by the 69,000 employees who are co-owners of the business.

The impact of the Malaysian code on corporate governance: compliance, institutional investors and stock performance

In 2001, the Malaysian Code on Corporate Governance (MCCG) became an integral part of the Bursa Malaysia Listing Rules, which requires all listed firms to disclose the extent of compliance with the MCCG. Our panel analysis of 440 firms from 1999 to 2002 finds that corporate governance reform in Malaysia has been successful, with a significant improvement in governance practices. The relationship between ownership by the Employees Provident Fund (EPF) and corporate governance has strengthened during the period subsequent to the reform, in line with the lead role taken by the EPF in establishing the Minority Shareholders Watchdog Group. The implementation of MCCG has had a substantial effect on shareholders' wealth, increasing stock prices by an average of about 4.8%. Although there is no evidence that politically connected firms perform better, political connections do have a significantly negative effect on corporate governance, which is mitigated by institutional ownership.

Assessment for learning - Why the theory needs the practice

Assessment for Learning is a pedagogical practice with anticipated gains of increased student motivation, mastery and autonomy as learners develop their capacity to monitor and plan their own learning progress. Assessment for Learning (AfL) differs from Assessment of learning in its timing, occurring within the regular flow of learning rather than end point, in its purpose of improving student learning rather than summative grading and in the ownership of the learning where the student voice is heard in judging quality. Since Black and Wiliam (1998) highlighted the achievement gains that AfL practices seem to bring to all learners in classrooms, it has become part of current educational policy discourse in Australia, yet teacher adoption of the practices is not a straightforward implementation of techniques within an existing classroom repertoire. As can be seen from the following meta-analysis, recent research highlights a more complex interrelationship between teacher and student beliefs about learning and assessment, and the social and cultural interactions in and contexts of the classroom. More research is needed from a sociocultural perspective that allows meaning to emerge from practice. Before another policy push, we need to understand better the many factors within the assessment relationship. We need to hear from teachers and students through long-term AfL case studies both to inform AfL theory and to shed light on the complexities of pedagogical change for enhancing learner autonomy.

Is there a physicality requirement at Common Law? : a survey of the Pre-NRDC cases discussing ‘Manufacture’

One of the fundamental issues that remains unresolved in patent law today, both in Australia and in other jurisdictions, is whether an invention must produce a physical effect or cause a physical transformation of matter to be patentable, or whether it is sufficient that an invention involves a specific practical application of an idea or principle to achieve a useful result. In short, the question is whether Australian patent law contains a physicality requirement. Despite being recently considered by the Federal Court, this is arguably an issue that has yet to be satisfactorily resolved in Australia. In its 2006 decision in Grant v Commissioner of Patents, the Full Court of the Federal Court of Australia found that the patentable subject matter standard is rooted in the physical, when it held that an invention must involve a physical effect or transformation to be patent eligible. That decision, however, has been the subject of scrutiny in the academic literature. This article seeks to add to the existing literature written in response to the Grant decision by examining in detail the key common law cases decided prior to the High Court’s watershed decision in National Research Development Corporation v Commissioner of Patents, which is the undisputed authoritative statement of principle in regards to the patentable subject matter standard in Australia. This article, in conjunction with others written by the author, questions the Federal Court’s assertion in Grant that the physicality requirement it established is consistent with existing law.

Corporate governance, accounting and finance: a review

We review accounting and finance research on corporate governance (CG). In the course of our review, we focus on a particularly vexing issue, namely endogeneity in the relationships between CG and other matters of concern to accounting and finance scholars, and suggest ways to deal with it. Given the advent of large commercial CG databases, we also stress the importance of how CG is measured and in particular, the construction of CG indices, which should be sensitive to local institutional arrangements, and the need to capture both internal and external aspects of governance. The ‘stickiness’ of CG characteristics provides an additional challenge to CG scholars. Better theory is required, for example, to explain whether various CG practices substitute for each other or are complements. While a multidisciplinary approach to developing better theory is never without its difficulties, it could enrich the current body of knowledge in CG. Despite the vastness of the existing CG literature, these issues do suggest a number of avenues for future research.

Scaling analysis of the unsteady natural convection boundary layer adjacent to an inclined plate for Pr > 1 following instantaneous heating

The unsteady natural convection boundary layer adjacent to an instantaneously heated inclined plate is investigated using an improved scaling analysis and direct numerical simulations. The development of the unsteady natural convection boundary layer following instantaneous heating may be classified into three distinct stages including a start-up stage, a transitional stage and a steady state stage, which can be clearly identified in the analytical and numerical results. Major scaling relations of the velocity and thicknesses and the flow development time of the natural convection boundary layer are obtained using triple-layer integral solutions and verified by direct numerical simulations over a wide range of flow parameters.

Media as creative industries : conglomeration and globalization as accumulation strategies in an age of digital media

This chapter will begin by considering some of the distinctive features of media as creative industries, including their assessment of risk and return on investment, team-based production, the management of creativity, the value chain of production, distribution and circulation, and the significance of intellectual property in their revenue strategies. It will then critically appraise three strategies to capture new markets and revenue streams in the context of the rise of the Internet, digital media and globally networked distribution. The three strategies to be considered are conglomeration, networking and globalization, and the focus will be on the media giants such as News Corporation, Disney and Time-Warner. It will be argued that all three present considerable challenges in their application, and digital media technologies are weakening rather than strengthening their capacity to control the global media environment. The chapter will conclude with consideration of some implications of this analysis for questions of media power.

Evaluating educational software : a historical overview and the challenges ahead

Teachers are under increasing pressure from government and school management to incorporate technology into lessons. They need to consider which technologies can most effectively enhance subject learning, encourage higher order thinking skills and support the performance of authentic tasks. This chapter reviews the practical and theoretical tools that have been developed to aid teachers in selecting software and reviews the software assessment methodologies from the 1980s to the present day. It concludes that teachers need guidance to structure the evaluation of technology, to consider its educational affordances, its usability, its suitability for the students and the classroom environment and its fit to the teachers’ preferred pedagogies.

Neo-planning: Location-based social media to engage Australia’s new digital locals

Community engagement with time poor and seemingly apathetic citizens continues to challenge local governments. Capturing the attention of a digitally literate community who are technology and socially savvy adds a new quality to this challenge. Community engagement is resource and time intensive, yet local governments have to manage on continually tightened budgets. The benefits of assisting citizens in taking ownership in making their community and city a better place to live in collaboration with planners and local governments are well established. This study investigates a new collaborative form of civic participation and engagement for urban planning that employs in-place digital augmentation. It enhances people’s experience of physical spaces with digital technologies that are directly accessible within that space, in particular through interaction with mobile phones and public displays. The study developed and deployed a system called Discussions in Space (DIS) in conjunction with a major urban planning project in Brisbane. Planners used the system to ask local residents planning-related questions via a public screen, and passers-by sent responses via SMS or Twitter onto the screen for others to read and reflect, hence encouraging in-situ, real-time, civic discourse. The low barrier of entry proved to be successful in engaging a wide range of residents who are generally not heard due to their lack of time or interest. The system also reflected positively on the local government for reaching out in this way. Challenges and implications of the short-texted and ephemeral nature of this medium were evaluated in two focus groups with urban planners. The paper concludes with an analysis of the planners’ feedback evaluating the merits of the data generated by the system to better engage with Australia’s new digital locals.

Characteristics of modal sound radiation of finite cylindrical shells

Characteristics of modal sound radiation of finite cylindrical shells are studied using finite element and boundary element methods in this paper. In the low frequency range, modal radiation efficiencies of finite cylindrical shells are found to asymptotically approach those of the corresponding infinite cylindrical shell when structural trace wavelengths of the cylindrical shells are greater than the acoustic wavelength. Modal radiation efficiencies for each group of modes having the same circumferential modal index decrease as the axial modal index increases. They converge to each other when the axial trace wavelength is much greater than the circumferential trace wavelength. The mechanism leading to lower radiation efficiency of modes with higher circumferential modal index of short cylinders is explained. Similar to those of flat plate panels, change in slope or waviness is observed in modal radiation efficiency curves of modes with higher order axial modal index at medium frequencies. This is attributed to the interference of sound radiated by neighbouring vibrating cells when the distance between nodal lines of a vibrating mode is in the same order or smaller than the acoustic wavelength. Effects of the internal sound field on modal radiation efficiencies of a finite open-end cylinder are discussed.

Analysis of rural activity spaces and transport disadvantage using a multi-method approach

Current knowledge about the relationship between transport disadvantage and activity space size is limited to urban areas, and as a result, very little is known about this link in a rural context. In addition, although research has identified transport disadvantaged groups based on their size of activity space, these studies have, however, not empirically explained such differences and the result is often a poor identification of the problems facing disadvantaged groups. Research has shown that transport disadvantage varies over time. The static nature of analysis using the activity space concept in previous research studies has lacked the ability to identify transport disadvantage in time. Activity space is a dynamic concept; and therefore possesses a great potential in capturing temporal variations in behaviour and access opportunities. This research derives measures of the size and fullness of activity spaces for 157 individuals for weekdays, weekends, and for a week using weekly activity-travel diary data from three case study areas located in rural Northern Ireland. Four focus groups were also conducted in order to triangulate quantitative findings and to explain the differences between different socio-spatial groups. The findings of this research show that despite having a smaller sized activity space, individuals were not disadvantaged because they were able to access their required activities locally. Car-ownership was found to be an important life line in rural areas. Temporal disaggregation of the data reveals that this is true only on weekends due to a lack of public transport services. In addition, despite activity spaces being at a similar size, the fullness of activity spaces of low-income individuals was found to be significantly lower compared to their high-income counterparts. Focus group data shows that financial constraint, poor connections both between public transport services and between transport routes and opportunities forced individuals to participate in activities located along the main transport corridors.

High speed rail and regional competitiveness

The presence of High Speed Rail (HSR) systems influences market shares of road and air transport, and the development of cities and regions they serve. With the deployment of HSR infrastructure, changes in accessibility have occurred. These changes have lead researchers to investigate effects on the economic and spatial derived variables. Contention exists when managing the trade off between efficiency, and access points which are usually in the range of hundreds of kilometres apart. In short, it is argued that intermediate cities, bypassed by HSR services, suffer a decline in their accessibility and developmental opportunities. The present Chapter will analyse possible impacts derived from the presence of HSR infrastructure. In particular, it will consider small and medium agglomerations in the vicinity of HSR corridors, not always served by HSR stations. Thus, a methodology is developed to quantify accessibility benefits and their distribution. These benefits will be investigated in relation to different rail transit strategies integrating HSR infrastructure where a HSR station cannot be positioned. These strategies are selected principally for the type of service offered: (i) cadenced, (ii) express, (iii) frequent or (iv) non-stopping. Furthermore, to ground the theoretical approach linking accessibility and competitiveness, a case study in the North-Eastern Italian regions will be used for the application of the accessibility distributive patterns between the HSR infrastructure and the selected strategies. Results indicate that benefits derive from well informed decisions on HSR station positioning and the appropriate blend of complementary services in the whole region to interface HSR infrastructure. The results are significant for all countries in Europe and worldwide, not only for investing in HSR infrastructure, but mostly in terms of building territorial cohesion, while seeking international recognition for developing successful new technology and systems.

Corporate governance mechanisms and earnings management in transitional countries – evidence from Chinese listed firms

The objective of this thesis is to investigate whether the corporate governance practices adopted by Chinese listed firms are associated with the quality of earnings information. Based on a review of agency and institutional theory, this study develops hypotheses that predict the monitoring effectiveness of the board and the audit committee. Using a combination of univariate and multivariate analyses, the association between corporate governance mechanisms and earnings management are tested from 2004 to 2008. Through analysing the empirical results, a number of findings are summarised as below. First, board independence is weakened by the introduction of government officials as independent directors on the boards. Government officials acting as independent directors, claim that they meet the definition of independent director set by the regulation. However, they have some connection with the State, which is the controlling shareholder in listed SOEs affiliated companies. Consequently, the effect of the independent director’s expertise in constraining earnings management is mitigated as demonstrated by an insignificant association between board expertise and earnings management. An alternative explanation for the inefficiency of board independence may point to the pre-selection of independent directors by the powerful CEO. It is argued that a CEO can manipulate the board composition and choose the "desirable" independent directors to monitor themselves. Second, a number of internal mechanisms, such as board size, board activities, and the separation of the roles of the CEO and chair are found to be significantly associated with discretionary accruals. This result suggests that there are advantages in having a large and active board in the Chinese setting. This can offset the disadvantages associated with large boards, such as increased bureaucracy, and hence, increase the constraining effects of a large and resourceful board. Third, factor analysis identifies two factors: CEO power and board power. CEO power is the factor which consists of CEO duality and turnover, and board power is composed of board size and board activity. The results of CEO power show that if a Chinese listed company has CEO duality and turnover at the same time, it is more likely to have a high level of earnings management. The significant and negative relationship between board power and accruals indicate that large boards with frequent meetings can be associated with low level of earnings management. Overall, the factor analysis suggests that certain governance mechanisms complement each other to become more efficient monitors of opportunistic earnings management. A combination of board characteristics can increase the negative association with earnings management. Fourth, the insignificant results between audit committees and earnings management in Chinese listed firms suggests that the Chinese regulator should strengthen the audit committee functions. This thesis calls for listed firms to disclose more information on audit committee composition and activities, which can facilitate future research on the Chinese audit committee’s monitoring role. Fifth, the interactive results between State ownership and board characteristics show that dominant State ownership has a moderating effect on board monitoring power as the State totally controls 42% of the issued shares. The high percentage of State ownership makes it difficult for the non-controlling institutional shareholders to challenge the State’s dominant status. As a result, the association between non-controlling institutional ownership and earnings management is insignificant in most situations. Lastly, firms audited by the international Big4 have lower abnormal accruals than firms audited by domestic Chinese audit firms. In addition, the inverse U-shape relationship between audit tenure and earnings quality demonstrates the changing effects of audit quality after a certain period of appointment. Furthermore, this thesis finds that listing in Hong Kong Stock Exchanges can be an alternative governance mechanism to discipline Chinese firms to follow strict Hong Kong listing requirements. Management of Hong Kong listed companies are exposed to the scrutiny of international investors and Hong Kong regulators. This in turn reduces their chances of conducting self-interested earnings manipulation. This study is designed to fill the gap in governance literature in China that is related to earnings management. Previous research on corporate governance mechanisms and earnings management in China is not conclusive. The current research builds on previous literature and provides some meaningful implications for practitioners, regulators, academic, and international investors who have investment interests in a transitional country. The findings of this study contribute to corporate governance and earnings management literature in the context of the transitional economy of China. The use of alternative measures for earnings management yields similar results compared with the accruals models and produces additional findings.

Bilski v Kappos : The United States Supreme Court delivers mixed views on patenting non-physical inventions and business methods

The United States Supreme Court has handed down a once in a generation patent law decision that will have important ramifications for the patentability of non-physical methods, both internationally and in Australia. In Bilski v Kappos, the Supreme Court considered whether an invention must either be tied to a machine or apparatus, or transform an article into a different state or thing to be patentable. It also considered for the first time whether business methods are patentable subject matter. The decision will be of particular interest to practitioners who followed the litigation in Grant v Commissioner of Patents, a Federal Court decision in which a Brisbane-based inventor was denied a patent over a method of protecting an asset from the claims of creditors.