Premium Essay

Nature of Corporate Govenance

In: Business and Management

Submitted By blacktt
Words 2312
Pages 10
To describe corporate governance as a subject of topical interest would be masterly understatement. What had already become a hot topic in Australia during 2001 has since burst out across the world, involving the direct intervention of the President of the
United States. I’d say that Monash University has got its timing pretty right.
The interesting question is whether this initiative would have received any interest or support in Australia two years ago. There is little doubt that by the end of the 1990s the business community was becoming wearied by the concept of corporate governance, seeing it as somewhat irrelevant, even passé: a response to the no longer relevant excesses of the 1980s.
Many years of sustained economic growth, and Australia’s remarkable survival of the financial crisis in Asia, had led to a period of complacency about corporate governance
- over time it became institutionalised and compliance focused, more driven by process and legal liability management for corporate officers than by notions of shareholder protection and wealth creation.
In retrospect this self-confidence looks particularly short-sighted. At the very time when most of Asia, supported by the World Bank and the IMF, was focussed on the importance of corporate governance and institution building, the more developed economies (including Australia) assumed that their existing standards were adequate.
We were, I think, partly lulled by the knowledge that some of the key economic contributors to the 1980s’ failures were absent. We did not have runaway inflation; excessive over-valuation of commercial property; or undisciplined bank lendingpractices – all of which contributed to the 1980s’ bust. We had addressed some of the more offens ive manipulations of the corporate structure that were so effectively utilized by the so-called ‘entrepreneurs’ of the 1980s. We...

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