Corporate governance quality, audit fees and non-audit services fees

This paper extends prior research on the relationship between governance quality and auditor remuneration.We examine the influence of audit committee effectiveness (ACE), a proxy for governance quality, on audit fees (AF) and non-audit services fees (NASF) using a new composite measure comprising audit committee independence, expertise, diligence and size. We find that after controlling for board of director characteristics, there is a significant positive association between ACE and AF only for larger clients. Our results indicate that effective audit committees undertake more monitoring which results in wider audit scope and higher audit fees. Contrary to our expectations, we find the association between ACE and NASF to be positive and significant, especially for larger clients. This suggests that larger clients are more likely to purchase non-audit services (NAS) even in the presence of effective audit committees probably due to the complexity of their activities. Overall, our findings support regulatory initiatives aimed at improving corporate governance quality.

The Corporate Governance Effects of Audit Committee

This chapter provides a synthesis and evaluation of empirical research on the governance effects associated with audit committees. Given recent policy recommendations in several countries aimed at strengthening these committees, it is important to establish what research evidence demonstrates about their existing governance contribution. A framework for analyzing the impact of audit committees is described, identifying potential perceived effects which may have led to their adoption and documented effects on aspects of the audit function, on financial reporting quality and on corporate performance. It is also shown that most of the existing research has focused on factors associated with audit committee existence, characteristics, and measures of activity and there is very little evidence on the processes associated with the operation of audit committees and the manner in which they influence organizational behavior. It is clear that there is no automatic relationship between the adoption of audit committee structures or characteristics and the achievement of particular governance effects, and caution may be needed over expectations that greater codification around factors such as audit committee members’ independence and expertise as the means of ‘‘correcting’’ past weaknesses in the arrangements for audit committees. The most fundamental question concerning what difference audit committees make in practice continues to be an important area for research development. For future research we suggest: (1) greater consideration of the organizational and institutional contexts in which audit committees operate; (2) explicit theorization of the processes associated with audit committee operation; (3) complementing extant research methods with field studies; and (4) investigation of unintended as well as expected consequences of audit committees.

Corporate governance in 2010 : what will change?

2010 is expected to see the publication of a new UK Code on Corporate Governance, replacing the Combined Code. Why is a new code being issued? What significant changes are proposed? WIll it change the corporate governance world?

Understanding Formal and Informal Governance on Infrastructure Projects - Literature Review [industry report]

In Australia, collaborative contracts have been increasingly used to govern infrastructure projects. These contracts combine formal and informal mechanisms to manage project delivery. Formal mechanisms (e.g. financial risk sharing) are specified in the contract, while informal mechanisms (e.g. integrated team) are not. The paper reports on a literature review to operationalise the concepts of formal and informal governance, as the literature contains a multiplicity of, often un-testable, definitions. This work is the first phase of a study that will examine the optimal balance of formal and informal governance structures. Desk-top review of leading journals in the areas of construction management and business management, as well as recent government documents and industry guidelines, was undertaken to to conceptualise and operatinalise formal and informal governance mechanisms. The study primarily draws on transaction-cost economics (e.g. Williamson 1979; 1991), relational contract theory (Feinman 2000; Macneil 2000) and social psychology theory (e.g. Gulati 1995). Content analysis of the literature was undertaken to identify key governance mechanisms. Content analysis is a commonly used methodology in the social sciences area. It provides rich data through the systematic and objective review of literature (Krippendorff 2004). NVivo 9, a qualitative data analysis software package, was used to assist in this process. Formal governance mechanisms were found to be usefully broken down into four measurable categories: (1) target cost arrangement (2) financial risk and reward sharing regime (3) transparent financials and (4) collaborative multi-party agreement Informal governance mechanisms were found to be usefully broken down into three measurable categories: (1) leadership structure (2) integrated team (3) joint management system We expect these categories to effectively capture the key governance drivers of outcomes on infrastructure projects. These categories will be further refined and broken down into individual governance mechanisms for assessment through a large-scale Australian survey planned for late 2012. These individual mechanisms will feature in the questionnaire that QUT will deliver to AAA in October 2012.

Institutional investors, risk/performance and corporate governance

Modern portfolio theory suggests that investors minimize risk for a given level of expected return by carefully choosing the proportions of various assets. This study sets out to determine the role of the institutional investor in monitoring risk and firm performance. Using a sample of Australian firms from 2006 to 2008, our empirical study shows a positive association between firm-specific risk, risk-management policy, and performance for firms with increasing institutional shareholdings. The study also finds that the significance of this association depends on the institutional investor's ability to influence management, which in turn depends on the size of ownership and whether the investee firm does not have potential business dealings with the investor. We also find that when firms are financially distressed, institutional investors engage in promoting short-term performance or exit rather than support long-term value creation. The results are robust while controlling the potential for endogeneity and using sensitivity tests to control for variants of performance and risk. These findings add to the growing body of literature examining institutional ownership and the importance of understanding the role of risk-management in the risk and return relation.

A study of safety leadership and safety governance for board members and senior executives

This thesis is an investigation of the fields of leadership and corporate governance in the context of workplace safety. The research has made a contribution by defining four criteria of safety leadership and applying these criteria to board members, senior executives and written communications. The thesis outlines the findings of two studies; the first is an analysis of public disclosures in ASX200 annual reports and CSR reports, and the second comprises two case studies of large Australian companies including interviews with board members and senior executives. The concept of safety governance is defined and a safety governance framework is developed.

Design thinking frameworks as transformative cross-disciplinary pedagogy

Final report for the Australian Government Office for Learning and Teaching. "This seed project ‘Design thinking frameworks as transformative cross-disciplinary pedagogy’ aimed to examine the way design thinking strategies are used across disciplines to scaffold the development of student attributes in the domain of problem solving and creativity in order to enhance the nation’s capacity for innovation. Generic graduate attributes associated with innovation, creativity and problem solving are considered to be amongst the most important of all targeted attributes (Bradley Review of Higher Education, 2009). The project also aimed to gather data on how academics across disciplines conceptualised design thinking methodologies and strategies. Insights into how design thinking strategies could be embedded at the subject level to improve student outcomes were of particular interest in this regard. A related aim was the investigation of how design thinking strategies could be used by academics when designing new and innovative subjects and courses." Case Study 3: QUT Community Engaged Learning Lab Design Thinking/Design Led Innovation Workshop by Natalie Wright Context "The author, from the discipline area of Interior Design in the QUT School of Design, Faculty of Creative Industries, is a contributing academic and tutor for The Community Engaged Learning Lab, which was initiated at Queensland University of Technology in 2012. The Lab facilitates university-wide service-learning experiences and engages students, academics, and key community organisations in interdisciplinary action research projects to support student learning and to explore complex and ongoing problems nominated by the community partners. In Week 3, Semester One 2013, with the assistance of co-lead Dr Cara Wrigley, Senior Lecturer in Design led Innovation, a Masters of Architecture research student and nine participating industry-embedded Masters of Research (Design led Innovation) facilitators, a Design Thinking/Design led Innovation workshop was conducted for the Community Engaged Learning Lab students, and action research outcomes published at 2013 Tsinghua International Design Management Symposium, December 2013 in Shenzhen, China (Morehen, Wright, & Wrigley, 2013)."

Analysing governance of Australia's system of landscape-based greenhouse gas abatement

Healthy governance systems are key to delivering effective outcomes in any broad domain of natural resource management (NRM). One of Australia's emerging NRM governance domains is our national framework for greenhouse gas abatement (GGA), as delivered through a wide range of management practices in the Australian landscape. The emerging Landscape-Based GGA Domain represents an innovative governance space that straddles both the nation's broader NRM Policy and Delivery Domain and Australia's GGA Domain. As a point-in-time benchmark, we assess the health of this hybrid domain as it stood at the end of 2013. At that time, the domain was being progressed through the Australian government's Clean Energy Package and, more particularly, its Carbon Farming Initiative (CFI). While significant changes are currently under development by a new Australian government, this paper explores key areas of risk within the governance system underpinning this emerging hybrid domain at that point in time. We then map some potential reform or continuous improvement pathways required (from national to paddock scale) with the view to securing improved landscape outcomes over time through widespread GGA activities.

Liquid metal/metal oxide frameworks with incorporated Ga2O3 for photocatalysis

Solvothermally synthesized Ga2O3 nanoparticles are incorporated into liquid metal/metal oxide (LM/MO) frameworks in order to form enhanced photocatalytic systems. The LM/MO frameworks, both with and without incorporated Ga2O3 nanoparticles, show photocatalytic activitydue to a plasmonic effect where performance is related to the loading of Ga2O3 nanoparticles. Optimum photocatalytic efficiency is obtained with 1 wt% incorporation of Ga2O3 nanoparticles. This can be attributed to the sub-bandgap states of LM/MO frameworks, contributing to pseudo-ohmic contacts which reduce the free carrier injection barrier to Ga2O3.

Enterprise business technology governance: A validation of three technology-governance competencies for boards of directors

The competent leadership and governance of digital transformation needs to involve the board of directors. The reported lack of such capability in boards is becoming a pressing issue. Underpinning leadership in such transformation are the competencies to effectively govern Enterprise Technology (ETG). In this paper we take the position that ETG competencies are essential in boards because competent enterprise business technology governance has been shown to contribute to increased revenue, profit, and returns. We report the industry validation processes of a set of three board-of-director competencies needed for effective ETG related to strategy and planning; investment and risk; and, innovation and value creation. We conclude that gaps in board ETG competence remain.

The evolving landscape of natural resource planning and governance in Australia

Australia’s governance of land and natural resources involves multiple polycentric domains of decision-making from global through to local levels. Although certainly complex, these arrangements have not necessarily translated into better decision-making or better environmental outcomes as evidenced by the growing concerns over the health and future of the Great Barrier Reef, (GBR). However within this system, arrangements for natural resource management (NRM) and reef water quality, which both use Australia’s integrated regional NRM model, have showed signs of improving decision-making and environmental outcomes in the GBR. In this paper we describe the latest evolutions in the governance and planning for natural resource use and management in Australia. We begin by reviewing the experience with first generation NRM as published in major audits and evaluations. As our primary interest is the health and future of the GBR, we then consider the impact of changes of second generation planning and governance outcomes in Queensland. We find that first generation plans, although developed under a relatively cohesive governance context, faced substantial problems in target setting, implementation, monitoring and review. Despite this, they were able to progress improvements in water quality in the Great Barrier Reef Regions. Second generation plans, currently being developed, face an even greater risk of failure due to the lack of bilateralism and cross-sectoral cooperation across the NRM governance system. The findings highlight the critical need to re-build and enhance the regional NRM model for NRM planning to have a positive impact on environmental outcomes in the GBR.

Planning and governance approaches for protecting World Heritage Areas: A comparison of the Great Barrier Reef and the Florida Everglades

The focus of this paper is on two World Heritage Areas: the Great Barrier Reef in Queensland, Australia and the Everglades in Florida. While both are World Heritage listed by the UNESCO, the Everglades is on the "World Heritage in Danger" list and the Great Barrier Reef could be on this list within the next year if present pressures continue. This paper examines the planning approaches and governance structures used in these two areas (Queensland and Florida) to manage the growth and development pressures. To make the analysis manageable, given the scale of these World Heritage areas, case studies at the local government level will be used: the Cairns Regional Council in Queensland and Monroe County in Florida. The case study analysis will involve three steps: (1) examination of the various plans at the federal, state, local levels that impact upon environmental quality in the Great Barrier Reef and Everglades; (2) assessing the degree to which these plans have been implemented; and (3) determine if (and how) the plans have improved environmental quality. In addition to the planning analysis we will also examine the governance structures (Lebel et al. 2006) within which planning operates. In any comparative analysis context is important (Hantrais 2009). Contextual differences between Queensland and Florida have previously been examined by Sipe, et al. (2007) and will be used as the starting point for this analysis. Our operating hypothesis and preliminary analysis suggests that the planning approaches and governance structures used in Florida and Queensland are considerably different, but the environmental outcomes may be similar. This is based, in part, on Vella (2004) who did a comparative analysis of environmental practices in the sugar industry in Florida and Queensland. This research re-examines this hypothesis and broadens the focus beyond the sugar industry to growth and development more broadly.