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?

Health and guardianship law : guardianship and administration application in the matter of MDC [2014] QCAT 338

The recent decision of the Queensland Civil and Administrative Tribunal (QCAT) in Guardianship and administration application in the matter of MDC [2014] QCAT 338, provides an important ruling on the limits of who can be appointed as an enduring power of attorney under the Powers of Attorney Act 1998 (Qld). In particular, the tribunal adopted a broad interpretation of the term "health provider" when considering the limits on who can be appointed as an enduring power of attorney under the legislation...

Insurance and transport law : controlling insurance contract terms : Section 54 of the Insurance Contracts Act – compliance, recovery and accountability

Commonwealth legislation covering insurance contracts contains numerous provisions designed to control the operation and effect of terms in life and general insurance contracts. For example, the Life Insurance Act 1995 (Cth) contains provisions regulating the consequences attendant upon incorrect statements in proposals [1] and non-payment of premiums, [2] provides that an insurer may only exclude liability in the case of suicide if it has made express provision for such contingency in its policy, [3] and severely restricts the efficacy of conditions as to war risks. [4] The Insurance Contracts Act 1984 (Cth) is even more intrusive and has a major impact upon contractual provisions in the general insurance field. It is beyond the scope of this note to explore all of these provisions in any detail but examples of controls and constraints imposed upon the operation and effect of contractual provisions include the following. A party is precluded from relying upon a provision in a contract of insurance if such reliance would amount to a failure to act with the utmost good faith. [5] Similarly, a policy provision which requires differences or disputes arising out of the insurance to be submitted to arbitration is void, [6] unless the insurance is a genuine cover for excess of loss over and above another specified insurance. [7] Similarly clause such as conciliation clauses, [8] average clauses, [9] and unusual terms [10] are given qualified operation. [11] However the provision in the Insurance Contracts Act that has the greatest impact upon, and application to, a wide range of insurance clauses and claims is s 54. This section has already generated a significant volume of case law and is the focus of this note. In particular this note examines two recent cases. The first, Johnson v Triple C Furniture and Electrical Pty Ltd [2012] 2 Qd R 337, (hereafter the Triple C case), is a decision of the Queensland Court of Appeal; and the second, Matthew Maxwell v Highway Hauliers Pty Ltd [2013] WASCA 115, (hereafter the Highway Hauliers case), is a decision of the Court of Appeal in Western Australia. This latter decision is on appeal to the High Court of Australia. The note considers too the decision of the New South Wales Court of Appeal in Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252 (hereafter the Prepaid Services case).These cases serve to highlight the complex nature of s 54 and its application, as well as the difficulty in achieving a balance between an insurer and an insured's reasonable expectations.

Teaching and Assessing Reflective Writing in a Large Undergraduate Core Substantive Law Unit

The focus of higher education has shifted towards building students’ skills and self-awareness for future employment, in addition to developing substantive discipline knowledge. This means that there is an increasing need for embedding approaches to teaching and learning which provide a context for skills development and opportunities for students to prepare for the transition from legal education to professional practice. This chapter reports on a large (500-600 students) core undergraduate Equity law unit in an Australian University. ePortfolio has been embedded in Equity as a means of enabling students to document their reflections on their skill development in that unit. Students are taught, practice and are assessed on their teamwork and letter writing skills in the context of writing a letter of advice to a fictional client in response to a real world problem. Following submission of the team letter, students are asked to reflect on their skill development and document their reflections in ePortfolio. A scaffolded approach to teaching reflective writing is adopted using a blended model of delivery which combines face to face lectures and online resources, including an online module, facts sheets designed to guide students through the process of reflection by following the TARL model of reflection, and exemplars of reflective writing. Although students have engaged in the process of reflective writing in Equity for some years, in semester one 2011 assessment criteria were developed and the ePortfolio reflections were summatively assessed for the first time. The model of teaching and assessing reflective practice was evaluated in a range of ways by seeking feedback from students and academic staff responsible for implementing the model and asking them to reflect on their experiences. This chapter describes why skill development and reflective writing were embedded in the undergraduate law unit Equity; identify the teaching and learning approaches which were implemented to teach reflective writing to online and internal Equity students; explain the assessment processes; analyse the empirical evidence from evaluations; document the lessons learnt and discuss planned future improvements to the teaching and assessment strategies.

Power law distributions in entrepreneurship : implications for theory and research

A long-held assumption in entrepreneurship research is that normal (i.e., Gaussian) distributions characterize variables of interest for both theory and practice. We challenge this assumption by examining more than 12,000 nascent, young, and hyper-growth firms. Results reveal that variables which play central roles in resource-, cognition-, action-, and environment-based entrepreneurship theories exhibit highly skewed power law distributions, where a few outliers account for a disproportionate amount of the distribution's total output. Our results call for the development of new theory to explain and predict the mechanisms that generate these distributions and the outliers therein. We offer a research agenda, including a description of non-traditional methodological approaches, to answer this call.

Do we need a law to help people try experimental drugs?

People with life-threatening or incurable diseases may be willing to try experimental drugs and unproven treatments, but they face the risk of exploitation. Is the law the best avenue to ensure that they are protected while medical innovation is encouraged? Protection of vulnerable people is a thread running through many laws, in Australia and elsewhere. In medical law, for instance, children and people with impaired decision-making capacity warrant special attention. But what of the ordinary person diagnosed with a life-threatening disease? Such people are vulnerable to harm and potential exploitation when they seek access to innovative, experimental or unproven treatments that depart from the existing range of accepted medicine.

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.

Class participation as a learning and assessment strategy in law : facilitating students’ engagement, skills development and deep learning

Assessment has widely been described as being ‘at the centre of the student experience’. It would be difficult to conceive of the modern teaching university without it. Assessment is accepted as one of the most important tools that an educator can deploy to influence both what and how students learn. Evidence suggests that how students allocate time and effort to tasks and to developing an understanding of the syllabus is affected by the method of assessment utilised and the weighting it is given. This is particularly significant in law schools where law students may be more preoccupied with achieving high grades in all courses than their counterparts from other disciplines. However, well-designed assessment can be seen as more than this. It can be a vehicle for encouraging students to learn and engage more broadly than with the minimums required to complete the assessment activity. In that sense assessment need not merely ‘drive’ learning, but can instead act as a catalyst for further learning beyond what a student had anticipated. In this article we reconsider the potential roles and benefits in legal education of a form of interactive classroom learning we term assessable class participation (‘ACP’), both as part of a pedagogy grounded in assessment and learning theory, and as a platform for developing broader autonomous approaches to learning amongst students. We also consider some of the barriers students can face in ACP and the ways in which teacher approaches to ACP can positively affect the socio-emotional climates in classrooms and thus reduce those barriers. We argue that the way in which a teacher facilitates ACP is critical to the ability to develop positive emotional and learning outcomes for law students, and for teachers themselves.