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Essay On Corporate Governance

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1. How corporate governance is currently regulated in Australia?
1.1What is corporate governance and CSR?
According to Cadbury report, corporate governance is the system by which organisations are directed and controlled, which is based on a number of concepts including transparency, independence, accountability and integrity.
The scandals over the last 20 years all over the world show there is a need for guidance to deal with various issues and risks in the operations of businesses, which have been major driving forces for the developments of corporate governance. Corporate governance becomes increasingly important due to economic globalisation. Good governance is a guide for company to achieve its goal in an ethical method; it can also make a reasonable assurance that company operates in an effective way so it attract the new investment from public in domestic and overseas.
Corporate social responsibility, which is an important part of corporate ethic, is expected to be exercised by companies. This concept focuses on the company’s relationship with its stakeholders. There are debates on whether companies should take the responsibilities beyond the target of maximising shareholders ' interests. Some experts argue that businesses do not have responsibilities for stakeholders other than stockholders; they believe “a corporation’s responsibility is to make as much money for the stockholders as possible” .However, some researchers find that companies which take their responsibilities can earn more profits than other companies. The views of companies in the eyes of stakeholders, especially customers, can be strong motivations for the companies to fulfil their social roles. The theory of corporate social responsibility is a constrain...

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...y conflicts of interests between different stakeholder groups. Secondly, the primary duty of directors or officers is achieving the best interest of the shareholder; the interests of shareholders should be taken into consideration only when they do not significantly damage shareholder’s interest .A redefinition of director’s duties in the law could be a burden for director to balance the interests of each parties appropriately. As a result, less efficient decisions would be made in such condition. Therefore, there should not be a change to the Corporate Act.
Under the existing legal framework, ASX Listing rules are important supplementaries of Corporate Act. Even though there is a principle encouraging companies to behave in an ethical and responsible way. There could be more principles to draw directors’ adequate attentions to corporate social responsibility.
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