Particularly in the last decades the awareness of companies themselves and the public for good corporate governance increased dramatically. “Corporate governance is set to be the primary focus for the 21st” century. Most of the advanced economies have released new corporate governance rules and codes or company laws, especially as a result of the financial crisis in 2007 and the breakdown of several big companies worldwide. In Australia attention to corporate governance has grown after the „major corporate collapses and scandals of 2001 and 2002“, which included „five publicly traded (…) companies (...) [such as the] telecom company (One.Tel)“.
One.Tel ran out of money and collapsed in 2001. The company could not be revived, all assets were sold and the workers laid off. It has once been the fourth largest telecom company in Australia. The collapse of the Australian company is „associated with serious deficiencies in its corporate governance, including weaknesses in internal control, (…) management communication with the board, and poor executive pay-to-performance link.“
In the first part, this paper will provide you with background information on the terms corporate governance and corporate control. The second part outlines corporate control in Australia by elaborating on the market for corporate control, monitoring by shareholders, monitoring by non-executives and renumeration.
Inhaltsverzeichnis (Table of Contents)
- Raised awareness for corporate governance in Australia
- Corporate governance and corporate control
- Definition and purpose of corporate governance
- Definition and purpose of corporate control
- Corporate control in Australia
- Market for corporate control
- Monitoring by shareholders
- Blockholders
- Institutional Investors and Proxy Advisers
- Monitoring by non-executive directors
- Renumeration
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to provide an overview of corporate control in Australia, focusing on the mechanisms that ensure companies meet their objectives. It begins by defining corporate governance and corporate control and then examines the Australian context.
- The definition and purpose of corporate governance and corporate control.
- The role of the market for corporate control in Australia.
- The impact of shareholder and non-executive director monitoring on corporate control.
- The significance of executive remuneration in corporate governance.
- The consequences of poor corporate governance, illustrated by examples such as the One.Tel collapse.
Zusammenfassung der Kapitel (Chapter Summaries)
1. Raised awareness for corporate governance in Australia: This chapter introduces the growing awareness of the importance of corporate governance, particularly following major corporate collapses and scandals in Australia during 2001 and 2002. The One.Tel collapse serves as a prime example, highlighting deficiencies in internal control, communication, and executive pay-to-performance links. This sets the stage for the subsequent discussion of corporate governance and control mechanisms in Australia.
2. Corporate governance and corporate control: This chapter provides foundational definitions of corporate governance and corporate control. Corporate governance is defined as the framework for exercising and controlling authority within corporations, aiming to balance management and investor interests. Corporate control, a key aspect of corporate governance, is the process of monitoring and controlling company activities to achieve objectives and mitigate the agency problem—the conflict of interest between management (agent) and shareholders (principal). The chapter emphasizes the importance of both internal and external control mechanisms.
3. Corporate control in Australia: This chapter delves into the specific mechanisms of corporate control in Australia. It highlights the market for corporate control, where underperforming companies become targets for hostile takeovers, incentivizing optimal management practices. Furthermore, the chapter explores internal control mechanisms such as shareholder and non-executive director monitoring, and executive remuneration, as crucial elements in ensuring that companies achieve their goals and act in the best interests of their stakeholders.
Schlüsselwörter (Keywords)
Corporate governance, corporate control, Australia, market for corporate control, shareholder monitoring, non-executive director monitoring, remuneration, agency problem, One.Tel collapse, corporate scandals.
Frequently Asked Questions: A Comprehensive Language Preview on Corporate Control in Australia
What is the overall topic of this document?
This document provides a comprehensive overview of corporate control in Australia. It explores the mechanisms that ensure companies meet their objectives, focusing on corporate governance, corporate control, and the various monitoring and control methods employed.
What are the key themes covered in this document?
Key themes include the definition and purpose of corporate governance and corporate control; the role of the market for corporate control in Australia; the impact of shareholder and non-executive director monitoring; the significance of executive remuneration in corporate governance; and the consequences of poor corporate governance, illustrated by the One.Tel collapse.
What is the definition of corporate governance as presented in this document?
Corporate governance is defined as the framework for exercising and controlling authority within corporations, aiming to balance management and investor interests.
What is the definition of corporate control as presented in this document?
Corporate control is defined as the process of monitoring and controlling company activities to achieve objectives and mitigate the agency problem—the conflict of interest between management (agent) and shareholders (principal).
What role does the market for corporate control play in Australia?
The market for corporate control acts as a mechanism where underperforming companies become targets for hostile takeovers, incentivizing optimal management practices and ensuring accountability.
How do shareholders and non-executive directors contribute to corporate control?
Shareholders and non-executive directors act as monitors, overseeing company activities and ensuring that management acts in the best interests of the company and its stakeholders. Specific examples include the roles of blockholders and institutional investors.
What is the significance of executive remuneration in corporate governance?
Executive remuneration is a crucial element in corporate governance. Its design should incentivize effective management and align executive interests with shareholder interests. Poorly designed remuneration packages can contribute to agency problems.
What is the role of the One.Tel collapse in this analysis?
The One.Tel collapse serves as a prime example illustrating the consequences of poor corporate governance, highlighting deficiencies in internal control, communication, and executive pay-to-performance links.
What are the main chapters discussed in the document?
The document is structured around several key chapters: Raised awareness for corporate governance in Australia; Corporate governance and corporate control; Corporate control in Australia; and a concluding chapter.
What are the keywords associated with this document?
Key words include: Corporate governance, corporate control, Australia, market for corporate control, shareholder monitoring, non-executive director monitoring, remuneration, agency problem, One.Tel collapse, corporate scandals.
- Quote paper
- Daniel Meidl (Author), 2014, Corporate Governance and Corporate Control. The Market for Corporate Control in Australia, Munich, GRIN Verlag, https://www.grin.com/document/320254
