Comparison in Private and Public Sector Governence

Parallels in Private and Public Sector Governance
Anona Armstronga, Xinting Jiab and Vicky Totikidisc Centre for International Corporate Governance Research, Victoria University, PO Box 14428, Melbourne, VIC 8001, Australia a bc

Private sector governance, i.e. governance in major listed companies, has caught much public attention in recent years due to the collapses of major corporations around the world. The result has been a plethora of standards for corporate governance in public and private companies. In comparison, public sector governance has avoided much of the controversies while developing along a parallel, if dissimilar path of raised awareness of the need for governance standards in the public sector. Examples of similarities that are markedly different in context are the role of agents, public sector managers manage funds on behalf the public versus the role played by managers in corporations, and the involvement (or expected involvement) of different stakeholders in both the public and the private sectors. This paper contrasts some of the differences in the models of governance found in the public and private sectors, and makes some observations about the desirable attributes to be sought in each. Keywords: Public sector governance, Private sector governance, models of governance Introduction In general corporate governance is concerned with the structures and processes for decision-making, accountability, control and behaviour at the top of organisations (Spiller, 2004). It addresses the issues arising from the interrelationships between boards of directors, such as interactions with senior management and relationships with the owners and others interested in the affairs of the entity, including regulators, auditors, creditors, debt financiers and analysts (Standards Australia, 2003). The purpose of good governance is to add value to the organisation, reduce financial, business and operational risk, strengthen shareholder confidence in the

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