Opting out of shareholder governance rights: a new perspective on contractual freedom in Australian corporate law

One of the classic debates in corporate law relates to whether the rules of corporate law are ar should be 'mandatory', in that companies must comply, or 'enabling' - meaning a set of default rules which companies have the choice of adopting or 'opting out' of through alternative contractual arrangements. The so-called 'mandatory/enabling' debate has been especially prominent in the United States fro numerous reasons, yet has also received some attention in Australia. That said, the extent to which companies can 'opt out' of corporate law has rarely been considered as a practical issue in Australia - particularly whether Australian companies can 'opt out' of provisions under the Corporations Act ("the Act"). However, just recently, two high-profile events in Australia have made 'opting out' of corporate law a relevant issue, especially the question of whether companies are free to 'opt out' of provisions of the Corporations Act  which provide express governance rights to shareholders. These events were Boral's constitutional amendment in 2003 to restrict the ability of shreholders to propose amendments to the company's constitution, and the contemplation and introduction of so-called 'pre-nuptial' agreements- designed to by-pass the right of shreholders to vote on removing directors in public companies. In the light of these two recent events, in this article the authors revisit the mandatory/enabling debate. However, rather than going over old ground as to whether a mandatory or enabling approach to corporate regulation is desirable, the authors approach the issue from a fresh perspective: that Australian Securitiesand Investments Commission's ("ASIC") existing relief powers under the Act should be extended to provide a means for companies to opt out of provisions containing shareholder governance rights.

Legal regulation and corporate governance in China`s top 100 listed companies

This article reports findings from an empirical study of corporate governance in China's top 100 listed companies. It examines the effectiveness of legal regulation, enforcement and remedies, finding that China's company and securities laws have not provided as string a legal framework for the protection of stakeholders im China's stock exchange listed companies as might be expected by investors.

Code of ethics quality : an international comparison of corporate staff support and regulation in Australia, Canada and the United States

The objective of this paper is to examine the ‘Code of Ethics Quality’ (CEQ) in the largest companies of Australia, Canada and the United States. For this purpose, a proposed CEQ construct has been applied. It appears from the empirical findings that while Australia, Canada and the United States are extremely similar in their economic and social development, there may well be distinct cultural mores and issues that are forming their business ethics practices. A research implication derived from the performed research is that the construct provides a selection of observable and measurable elements in the context of CEQ. The construct of CEQ consists of nine measures divided into two dimensions (i.e. staff support and regulation). They should not be seen as a complete list. On the contrary, it is encouraged that others propose and elaborate revisions and extensions. A practical implication of this paper is a structure of what and how to examine the CEQ in a managerial setting. It may assist companies in their efforts to establish, maintain and improve their ethical culture, norms and beliefs within the organization and supporting them in their ethical business practices with different stakeholders in the marketplace and society. The dimensions and measures of the construct may be used as a frame of reference for further research. They may be useful and applicable across contexts and over time using similar samples when it comes to large companies, as small- or medium-sized ones may not have considered all areas nor have the elements in place. This is a research limitation, but it provides an opportunity for further research.

The market for financial report audits : regulation of and competition for auditor independence

The independence of auditors and the quality of financial report audits generally are rarely tested except in circumstances of corporate failure when alleged sub-optimality is present. Often auditors have good defences as to their expertise or competency, but rarely do they have equally convincing defences for the independence of their audit. A major issue for the regulation of auditor independence is that the threats to independence are often subtle and difficult to measure. This paper argues that firms undertaking financial report audits need to be transparent and competitive in respect of auditor independence. Two models that adopt this premise are proposed.

Auditor independence and the nexus with corporate governance-quo vadis?

"Where were the auditors?" Yet again, the independence of the auditor has come under close, critical scrutiny with ongoing collapses of large listed companies, which have global implications for the proper functioning of investment markets. The most recent collapse being that of ENRON in the United States of America, (USA).

"Who are the auditors?" The nexus of auditor independence with corporate governance is examined drawing on Foucault's notion of the relationships between power I knowledge and ethics in the construction of ethical identity. In the face of declining public confidence and demands for more stringent regulation, the tensions between greater self-regulation of auditors by the accounting profession and moves by governments to impose more stringent legislation I regulation, including the creation of public oversight bodies is apparent. This paper presents a comparative analysis of recent developments internationally, with particular reference to South Africa and Australia, intended to more rigorously enforce auditor independence and improve corporate governance. Five key areas identified by various Commissions and regulatory bodies that are regarded as posing significant threats to auditor independence are highlighted. Recommendations for changes to independence requirements in professional codes of ethics and corporate legislation, intended to safeguard auditor independence and to enhance investor protection, are critically examined. It is argued that the "new" independence recommendations while providing more detailed guidance for dealing with the independence threats fail to introduce any new concepts and may be found as ineffective as the plethora of earlier regulations. (This paper represents work in progress, which is intended to spark debate, and accordingly, the authors invite comment from readers to develop further aspects of research into this critical area).

Corporate governance, board responsibilities and financial performance : the National Bank of Australia

This paper examines board responsibilities and accountability by management and Board of Directors in relation to the National Australia Bank's (NABs) performance. The NAB, an international financial service provider within the top thirty most profitable banks in the world, is compared with the Australian major banks. The evidence suggests that NABs poor performance was consistent with a lack of accountability, poor corporate governance and board dysfunction associated with fraudulent currency trading and the subsequent AUD360 million foreign currency losses. The NAB's performance is investigated by utilising accounting-based measures of profitability and cost efficiency as proxies for performance. Following the foreign currency trading losses in 2004 the NAB under-performed the other major Australian banks in terms of profits, cost to income ratio and growth in assets. In terms of profitability and cost efficiency NAB had the lowest ROE and ROA with a 19.7% fall in net profit and the highest cost to income ratio of 5 7.4% of any of the five largest banks. This case study provides an Australian example of poor corporate governance and suggests that financial institutions and regulators can learn from the NAB's experience. Failure to have top-down accountability can have significant impact on over-all performance, profitability and reputation. In particular, it suggests that management and Boards need to review their risk management procedures and regulators need to be more pro-active in their prudential oversight of financial institutions.

Gambling and corporate social responsibility (CSR) : re-defining industry and state roles on duty of care, host responsibility and risk management

During the 1990s, states embraced legalised gambling as a means of supplementing state revenue. But gaming machines (EGMs, pokies, VLTs, Slots) have become increasingly controversial in countries such as Australia, Canada and New Zealand, which experienced unprecedented roll-out of gaming machines in casino and community settings; alongside revenue windfalls for both governments and the gambling industry. Governments have recognised that gambling results in a range of social and economic harms and, similar to tobacco and alcohol, have introduced public policies predicated on harm minimisation. Yet despite these, gaming losses have continued to climb in most jurisdictions, along with concerns about gambling-related harms. The first part of this article discusses an emerging debate in Ontario Canada, that draws parallels between host responsibility in alcohol and gambling venues. In Canada, where government owns and operates the gaming industry, this debate prompts important questions on the role of the state, duty of care and regulation ‘in the public interest’ and on CSR, host responsibility and consumer protection. This prompts the question: Do governments owe a duty of care to gamblers?

The article then discusses three domains of accumulating research evidence to inform questions raised in the Ontario debate: evidence that visible behavioural indicators can be used with high confidence to identify problem gamblers on-site in venues as they gamble; new systems using player tracking and loyalty data that can provide management with high precision identification of problem gamblers and associated risk (for protective interventions); and research on technological design features of new generation gaming products in interaction with players, that shows how EGM machines can be the site for monitoring/protecting players. We then canvass some leading international jurisdictions on gambling policy CSR and consumer protection.

In light of this new research, we ask whether the risk of legal liability poses a tipping point for more interventionist public policy responses by both the state and industry. This includes a proactive role for the state in re-regulating the gambling industry/products; instituting new forms of gaming machine product control/protection; and reinforcing corporate social responsibility (CSR) and host responsibility obligations on gambling providers – beyond self-regulatory codes. We argue the ground is shifting, there is new evidence to inform public policy and government regulation and there are new pressures on gambling providers and regulators to avail themselves of the new technology – or risk litigation

Corporate social responsibility reporting : a business strategy by Australian banks?

The growth of voluntary corporate social responsibility (CSR) reporting reflects society's expectations for business to set higher ethical standards and to undertake business in a way that meets the profit imperative (the bottom line). Additionally, the community expects socially and environmentally responsible behaviour practices; the so-called triple bottom line approach. The paper briefly reviews the development of corporate social responsibility reporting from the perspective of two large Australian banks and attempts to understand their motivation for voluntary disclosure. Stakeholder theory and game theory provide a means to analyse why banks undertake CSR reporting. The paper compares Westpac and National Australia Bank's CSR reporting over the period 2004-2005 utilising external rating agencies and CSR reports to determine the extent of disclosure in relation to employees, environment, community and customers. The paper concludes with a discussion of the pros and cons of CSR, the role of regulation and recommendations for future policy direction.

Executive compensation and corporate governance with special reference to Bangladesh; some emerging issues

This discussion paper considers corporate governance issues associated with executive compensation arrangements. An historical perspective is used to demonstrate the absence of a sound empirically-based understanding of good corporate governance practices in relation to share-based payment arrangements. The paper provides an overview of issues including the potential earnings dilution and volatility effects of the introduction of regulations affecting executive remuneration. Potential future research questions have been framed addressing each of the major issues identified in this paper. We conclude that corporate regulators should ensure they are familiar with and consider best practice models for corporate governance when developing new, or revising existing business regulation. It is proposed that further research to remedy this deficiency would enable a more accurate assessment of the impact of management on accounting regulation and the better design and implementation of regulation.

Corporate governance of executive remuneration with special reference to Bangladesh

This discussion paper focuses on corporate governance issues associated with executive compensation arrangements. An historical perspective is used to demonstrate the absence of a sound empirically-based understanding of good corporate governance practices in relation to share-based payment arrangements. The paper provides an overview of issues including the potential earnings dilution and volatility effects of the introduction of regulations affecting executive remuneration. Potential research questions have been framed addressing each of the major issues identified in this paper. It is concluded that corporate regulators should ensure they are familiar with and that they consider best practice models for corporate governance when developing new or revising existing business regulation. It is proposed that further research to remedy this deficiency would enable a more accurate assessment of the impact of management on accounting regulation and the better design and implementation of regulation.

Perceptions of corporate boards about standards of corporate governance in Thailand

The aim in this study is to discover the nature and extent of corporate governance in listed companies in Thailand. This includes a consideration of theoretical underpinning for amendments made to the western models of corporate governance that have been implemented by Thai listed companies, and of the effect of corporate governance principles on financial information, including financial reports, used by stakeholders in Thai listed companies. The results in this study show that after the Asian financial crisis corporate governance in Thailand improved especially in enforcement and disclosure, and outside/independent directors and professional organisations are playing leading roles in that process. Better corporate governance has resulted from improved internal corporate governance mechanisms and enhanced accounting standards, information disclosure, and auditing standards. New and up-dated rules, new and revised laws, and increased regulation are in the forefront of improved corporate governance. Process-related activities like monitoring, supervising, enforcing, and higher awareness have increased. Moreover, corporate governance practices are now in the spotlight throughout the financial and investment markets.

'Corporate affairs' - public relations and asbestos production: a social history

This paper focusses on asbestos production in Australia and the public relations campaigns used in the 1970s to enable their continued operations in the face of social resistance advociating for changes in policy and regulation.