Corporate Governance in Australia After Hih and Globalisation
ABSTRACT
In the light of various corporate scandals, regulatory bodies and corporate governance were placed under pressure by shareholders and stakeholders to form a tighter grip in governing corporation’s conduct. The obligations, roles and responsibilities of company’s stewards are under scrutiny of Corporations Act, listing rules, country’s code of corporate governance, ethics as well as social standards.
At the same time, advocates of market forces as a replacement to regulations and legislation continue to pursue for market deregulation and liberalisation based on the believe that government intervention will only distort resources allocation and hinder market growth.
The collapse of Australian company HIH Insurance Ltd (HIH) in 2001 was analysed in terms of its conduct and compliance to the Corporations Act, listing rules as well as code of corporate governance as released by the Australian Securities Exchange (ASX) Corporate Governance Council (CGC). Reforms in regulations and the Corporate Governance Principles and Recommendations 2007 by ASX CGC were used to recommend best practices in corporate governance that should have taken place in HIH.
Lastly, the effect of globalization and challenges to good corporate governance resulting from globalization were discussed from the perspective of national government, regulatory bodies as well as the corporation itself.
Justice Neville Owen, The Royal Commissioner in the HIH Royal Commission Report described corporate governance as the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations, and the Australian Securities Exchange (ASX) Corporate Governance Council added that corporate governance relates to and influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized (The HIH Royal Commission, 2003; ASX Corporate Governance Council,
In the light of various corporate scandals, regulatory bodies and corporate governance were placed under pressure by shareholders and stakeholders to form a tighter grip in governing corporation’s conduct. The obligations, roles and responsibilities of company’s stewards are under scrutiny of Corporations Act, listing rules, country’s code of corporate governance, ethics as well as social standards.
At the same time, advocates of market forces as a replacement to regulations and legislation continue to pursue for market deregulation and liberalisation based on the believe that government intervention will only distort resources allocation and hinder market growth.
The collapse of Australian company HIH Insurance Ltd (HIH) in 2001 was analysed in terms of its conduct and compliance to the Corporations Act, listing rules as well as code of corporate governance as released by the Australian Securities Exchange (ASX) Corporate Governance Council (CGC). Reforms in regulations and the Corporate Governance Principles and Recommendations 2007 by ASX CGC were used to recommend best practices in corporate governance that should have taken place in HIH.
Lastly, the effect of globalization and challenges to good corporate governance resulting from globalization were discussed from the perspective of national government, regulatory bodies as well as the corporation itself.
Justice Neville Owen, The Royal Commissioner in the HIH Royal Commission Report described corporate governance as the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations, and the Australian Securities Exchange (ASX) Corporate Governance Council added that corporate governance relates to and influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized (The HIH Royal Commission, 2003; ASX Corporate Governance Council,
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