Introduction:
Corporate governance refers Corporate Law Work policies itself. In the current study, the researcher has tried to give in-depth analysis on the idea of corporate governance, its importance on stakeholder management, the concept of independent directors and its relation with corporate performance.
Good Corporate Law Work of governance:
A good corporate governance means establishing mechanism and management structure that helps to create a good relationship between the board of directors, stakeholders, staff and management, in order to serve best interests of the stakeholders and taking into account interests of all stakeholders (Farrar, 2001). Good corporate governance embarrasses some key principle into account including responsibility, accountability, equitable treatment, vision to create long-term value, transparency, vision etc. Good corporate governance is effective to encourage companies to create value through development, innovation, and exploration and at the same time, it provides accountability and control system to prevent risk involved. Thus, good corporate governance facilitates proper monitoring and incentive to the board of management in an organisation to follow the objectives and ethics that are in favour of the objective of a company and its shareholders.
Mechanisms those are plays a significant role in corporate governance in Australia:
As mentioned in above, corporate governance is a method for integrating and monitoring attention of board of directors, shareholders, auditors etc. and thereby mechanism to play role in Corporate Law Work governance in Australian economy has been given to the combined effects of monitoring these all-complementary effects (Mitchell, 2011). Mechanism of good corporate governance in Australia includes preventing problems entering emanating from the separation of ownership and control by positively influencing managerial behaviour. Direction and influence of top-level manager’s action towards the preferred stakeholders significantly depend on effectiveness and correctness of this mechanism. Corporate governance mechanism segregated into two categories, namely internal (board of directors, ownership concentration, executive compensation and multidivisional organisational culture) and external ( the market for corporate control). Internal corporate government mechanism regarding board of directors plays a significant role in maintaining good Corporate Law Work governance in Australia. According to this, board of directors are responsible for representing the firm owner by monitoring decision level of top managers (Dravis and Dravis, 2010). They review and rectify the effective decisions, set compensation for CEO and take decision on when to replace the CEO. As per the Corporate Law Work, there must be full protection for all stakeholder related to the organization including those who have very minority holding. There should be an active and interdependent board who totally take responsibility and overseas the corporation’s management. Further, transparency and full disclosure is allowed to all the company those are listed in the Australian Stock Exchange. Mechanisms to the corporate governance are effective to prevent massive destruction before they occur in reality.
The relevance of good corporate governance for the key stakeholder:
Good corporate governance plays a significant role in the context of stakeholder to a company. Improving the principle of good corporate governance makes company more concern about their stakeholders. In the past decades, companies only respect their stakeholders and customers as they provide major contribution to the business growth. But the implication of good corporate governance has changed the attitude and firms has realised that other stakeholders also have positive influence to the business. Stapledon (1996) illustrated that, stakeholder to a company refers all those people who are directly or indirectly related to the company and can be affected by the organisational behaviour action. Today business organisations are not only intended to know that quality of products and service, but also with the source of the products and thus interest of government, societies, medias etc. all are taken into account including overseas shareholders. This is the basic reason behind why corporate governance is important for the stakeholders (David, 2009). A well-executed corporate policy is effective to weeding out and eliminates problems with extreme prejudice. A company holds meetings with all internal (debt holders and shareholders) and external shareholders (such as customers, supplier, community leaders etc.) to address their needs and requests that in terms may leads to affects parties.
In most of the cases, interests of the small stakeholders are kept aside and decisions are makes based on the big stakeholders and the board executive. In this situation, good corporate governance ensure that all type of stakeholders get a chance to participate in the general meetings and allows to voice (Sundaramurthy and Lewis, 2003). Thus, stakeholders are basically recognized by the corporate governance. In particular, addressing interest of the non-shareholders is effective to create positive relation within the community and the press.
Key financial measure in determining the performance of corporate governance with an evaluation of the performance of Australian corporations’ board of director:
Implication of good corporate governance depends on ensuring trustworthy relationship between corporation and its shareholders. Thus, the measure of corporate relationship depends on several factors, including consistency, accountability, transparency, and effectiveness that it develops within an organisation. Basic responsibility of good corporate governance is to provide strategic guidance to the corporation as well as selecting changing management whenever is necessary (Hirschey et al. 2004). Key financial measures that determine effectiveness of corporate government are profitability condition of the organisation, corporate performance, number of interlocker, broad composition variable, diversification etc.. Based on the corporate governance, if corporation seeks to maximize interest of all stakeholder, they get more involve to the organization and tried to give their best. A high level of success can be achieved in a sustainable manner if corporation includes all principle of corporate governance in their business operation and in making their decisions (Bhagat and Black, 2002). Good corporate governance is very important to ensure sustainable development not only for a company, but also for the whole economy.
As the Australian nation is trying to increase its productivity and international competitiveness, board of director in a company are the key driver to success. In this context, the board of director plays a most important role in developing corporate governance structure. They play a significant role in defining clear separation between management’s rights and government’s rights (Huse, 2005). Clear separations between these two are very important and critical in minimizing several potential agency risks, such as fraud, cronyism, lethargy, focusing on excess as oppose to the results etc.
Current Australian legal regulation of directors’ duties is adequate to protect corporate directors – argument
The Australian legal regulations of director’s duties are formed of Corporate Law Work under the Corporation Act 2011. This Corporation Act and regulations are administrated by ASIC (Asian Securities and Investment Commission). ASIC have issued several policies and regulation that helps directors, mentioned their duties and compile this with the help of Corporation Act and regulations. Corporation Act has imposed several duties upon the directors in Australia, according to the law and particular statutes (Detomasi, 2002). In some cases, there is an overlap among these duties and thus consequence to breaching these duties under common law may be different. As per this law, directors always seek to prior advice of broad of an Australian corporation. As per the Common Law, the director should act in best interest of the company, give an adequate consequence, not fetter discretion and avoid conflicts of interests. On the other hand, the legal restriction imposed by Corporation Act on the director’s duties are avoided improper use of information, avoid financial reporting and disclosure, avoid involvement trading and act with good faith. However, the legal regulations that are engaged with the director’s duties are continuously becoming unattractive to protect corporate directors as the level of activism is increasing among the shareholders. Directors needs to get free from formulaic compliance burden in order to give more concentration on the strategic structural change to the Australian business environment.
Conclusion:
Having undertaken the entire study and analysing it can be said that corporate governance is basically a set of rules systems, relationships and process within or by which authorities in a corporation excursed and controlled. Further, due to some challenges, Australian legal regulations towards director’s duties are not effective to protect corporate directors. Finally, interdependent directors are really effective to increase organizational performance.