Corporate governance is a very important topic and it has attracted the public interest because it’s important in order to keep corporations and stakeholders economically healthy. Corporate Governance is believed to exist since the limited liability corporation origins. However, this topic has become more important and more people have shown an increased interest since 2001, due to the collapse and bankruptcy of many large corporations. These collapses sometimes were related to fraud and unethical behavior of the directors of these companies. One of the most notable failures of all times was the “Enron Scandal”, even that many years have passed since it is still one of the clearest examples of governance failures. Since then public and private companies felt the necessity to demonstrate commitment to improve governance in benefit of their stakeholders. (Emerald Insight Staff, 24)
Corporate Governance Definition
Corporate Governance is the system and set of processes or rules that will affect the way in which companies are being managed, operated and controlled. It influences objective achievements and sets. Good corporate governance structures and principles promote enterprises to generate value (through entrepreneurism, innovation, development and exploration) and it also provides accountability and control systems proportional to the involved risks. An integral part of effective corporate governance regime includes provisions for civil or criminal prosecution of individuals who conduct unethical and illegal acts in the name of enterprises. (ASX Corporate Governance Council, 2003) There are several models of Corporate Governance and these may differ in concordance with the capitalism model or the country in which they are applied. For this document, the efforts will be focused in order to describe the Australian model.
Corporate Governance in Australia
The Australian Stock Exchange Corporate Governance Council was founded on...