Corporate Governance

This subject ties together the full range of legal, managerial and ethical issues that affect corporate governance best practice. It identifies the best practice principles that students can apply in their own corporate or governmental situations. It builds upon the knowledge of the law and its practical application gained from Applied Corporate Law OR Public Law and Government.

Learning outcomes

  1. Research and critically apply the growing global, regional and local information sources on corporate governance
  2. Justify and promote awareness of, and be responsible for continuing self and personnel development on corporate governance themes
  3. Apply the concepts of disclosure in terms of accountability, transparency, corporate social responsibility, ethical standards and sustainability in governance
  4. Critically appraise and apply corporate governance principles and best practices in risk management for the board in the employing or client organisation
  5. Exercise appropriate judgement in the use of professional knowledge and skills to the resolution of practical issues and problems in the proper governance of the employing or client organisation.

Indicative content

The subject comprises the following 12 modules:

Module 1: Elements of corporate governance

  • Definitions of ‘corporate governance’
  • Key elements of corporate governance
  • The Corporations Act and corporate governance
  • Regulatory regime
  • Corporate Governance Disclosure Listing Rule
  • Corporate governance guidelines

Module 2: Role and function of boards

  • Corporate governance and the role of the board
    • The legal context
    • Board functions
    • The board’s role in formulating strategy
    • Different types of boards
    • The board’s role in understanding and mitigating risk

Module 3: Board performance assessment

  • Board performance assessment
    • Do companies review the performance of their boards?
    • Why assess the performance of the board?
    • How can board performance be assessed?
    • What are the key areas that the board should consider when assessing its own performance?
    • Measuring board performance
    • Individual director assessment
    • Guidelines covering board reviews

Module 4: Composition of the board

  • Board composition
    • Guidelines concerning composition of the board
    • Board diversity
    • Gender diversity
    • Other diversity
    • Diversity questions
    • Evidence concerning composition of the board — Non-executive directors   (NEDs) and cultural diversity
    • What is the role of NEDs?
    • What do NEDs need to fulfil their role?
    • What factors limit the effectiveness of the contributions of NEDs?
    • Evidence about the effectiveness of boards composed of non-executive or independent directors
  • Separation of chair and CEO
    • What is the rationale for separating the roles of chair and CEO?
    • Do companies actually separate the roles of chair and CEO?
  • Risk committee

Module 5: Board structures

  • Recommendations and role of the chair
  • Committees of the board
    • The nomination committee
    • The audit committee
    • The risk committee
    • Other committees and composition principles

Module 6: Shareholder influence and rights

  • The growing influence of shareholders
  • The dynamics of Australia’s institutional investors
  • Why do institutional shareholders take an interest in governance?
  • Examples of institutional involvement
  • Institutional codes of practice
  • Continuous disclosure
  • Exercise of shareholders’ rights
  • Future of the AGM

Module 7: Ethics and governance

  • Ethics versus regulation
    • What is ethics?
    • Law and ethics
    • The ethics ‘value add’
  • Resolving corporate questions from an ethical perspective
    • Step 1 — Identify the stakeholders affected by the relevant question
    • Step 2 — Identify the values held by those stakeholders
    • Step 3 — Prioritising and balancing the values
    • Example of resolving corporate dilemmas in an ethical framework
  • Ethics and corporate governance
    • Some particular ethical issues for governance

Module 8: Corporate social responsibility

  • Definition and overview
    • Stakeholders
    • Factors shaping CSR programs
    • CSR programs
  • CSR contexts
    • Sustainability and environment
    • Delivering socially responsive goods and services
    • Global and local choices — Shareholder and community value
    • Conclusion

Module 9: Director and executive remuneration

  • Remuneration considerations
    • Issues in remuneration
  • Regulation of remuneration practices
    • Banking Executive Accountability Regime (BEAR)
    • Corporations Act, ASX Listing Rules and ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations requirements
    • What information must be disclosed about director and executive remuneration in Australia?
    • Impact of remuneration disclosure
    • The role of remuneration committees
    • Other guidelines
    • Contemporary issues and trends in executive remuneration

Module 10: International models of corporate governance

  • Comparative corporate governance
  • The Anglo-American model
  • A classification of corporate governance systems
  • Convergence or divergence?
  • Country case studies

Module 11: Sector models of corporate governance

  • Governance in the not-for-profit sector
  • Governance in government-owned enterprises
  • Governance in the government sector
  • Conclusion

Module 12: Review and exam preparation

  • Case study
  • Reflection
  • Revision

Required texts

None

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