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,
References: Alcoc, R., & Bicego, C. (2003). The HIH Report and CLERP 9. Retrieved June 7, 2010, from http://www.findlaw.com.au/article/8816.htm ASX Corporate Governance Council (2007) Australian Securities & Investments Commission (2010a). The laws ASIC administers. Retrieved May 29, 2010, from http://www.asic.gov.au/asic/asic.nsf/byheadline/ The+laws+ASIC+administers?openDocument Australian Securities & Investments Commission (2010b) Bailey, B. (2003). Research Note no. 32 2002-03: Report of the Royal Commission into HIH Insurance. Retrieved June 4, 2010, from http://www.aph.gov.au/library/pubs/ rn/2002-03/03rn32.htm Barney, J.L Birt, J., Chalmers, K., Beal, D., Brooks, A., Byrne, S., & Oliver, J. (2008). Accounting: Business Reporting for Decision Making (2nd ed.). Queensland: John Wiley & Sons Australia. Cagan, P Deloitte Touche Tohmatsu (2005). Re-modelled CLERP 9 lifts the bar on corporate governance. Retrieved June 7, 2010, from http://www.deloitte.com/view/en_AU/au/ 33ec1c2a915fb110VgnVCM100000ba42f00aRCRD.htm Detomasi, D Dibbs Barker Gosling Lawyers (2003). Corporate Governance and Directors’ Duties In Australia. Retrieved May 28, 2010, from http://www.afic.am/CG/ CorporateGovernanceAndDirectors%27DutiesInAustralia.pdf duPlessis, J.J., McConvill, J Mrak, M. (2000). Globalisation: Trends, Challenges and Opportunities for Countries in Transition. Retrieved June 11, 2010, from http://www.unido.org/fileadmin/import/ userfiles/puffk/mrak.pdf Nicholson, G Rahman, R.A., & Salim, M.R. (2010). Corporate Governance In Malaysia – Theory, Law and Context. Malaysia: Sweet & Maxwell Asia. Smith, J.F.S Tee, O.C. (2005). The impact of globalisation on the formulation and implementation of monetary policy in Singapore. Retrieved June 11, 2010, from http://www.bis.org/ publ/bppdf/bispap23v.pdf The HIH Royal Commission (2003)