An evaluation of governance mechanisms as determinants of performance: A case study of Australian universities
| Author | Anona Armstrong,Chitra Sriyani De Silva Lokuwaduge |
| Published date | 01 June 2015 |
| Date | 01 June 2015 |
| DOI | http://doi.org/10.1177/1035719X1501500204 |
| Published By | Sage Publications, Inc. |
| Subject Matter | Practice Article |
22 Evaluation Journal of Australasia Vol 15 | No 2 | 2015
PRACTICE ARTICLE Evaluation Journal of Australasia Vol 15 | No 2 | 2015 | pp. 22–32
CHITRA SRIYANI DE SILVA LOKUWADUGE | ANONA ARMSTRONG
An evaluation of governance mechanisms
as determinants of performance
A case study of Australian universities
The premise underlying the introduction of corporate governance principles in the Australian
higher education sector is that good governance results in good performance. The purpose
of this paper is to evaluate the inuence of internal and external corporate governance
mechanisms as determinants of performance in the context of Australian publicly-funded
universities. Secondary data from annual reports were transformed to create indices of
internal and external governance practices, and teaching, research and nancial performance.
Relationships between governance and performance were analysed using correlation analysis.
The study illustrated in this paper is important as literature suggests that corporate governance
mechanisms and the inuence of these mechanisms on performance are contradictory.
The results of this study do not support the contention that in Australia, the governance of
universities has a signicant relationship with their performance.
Introduction
‘Governance’ refers to the direction and control exercised
by the boards or senior executives in organisations,
and the structures and relationships that make this
possible. It encompasses authority, accountability,
stewardship, leadership, direction, and control exercised
in organisations (Australian National Audit Oce 1999).
Evaluation is an integral part of good governance
because it provides the performance information for
assessing accountability. Governance was introduced
into the university sector as a means of ensuring greater
eciency and accountability including holding the
decision-makers accountable. Governance has its origins
in the public sector where it is defined as a process
for ‘giving attestations on such matters as reliability,
eectiveness, cost-eectiveness, eciency, safety, ease of
use and probity’ (Stuelbeam and Shrinkfield 2007, p. 4).
The Australian Securities Exchange (ASX)
principles and guidelines (2003) provide the basis
for the development of the Australian Government’s
Corporate Governance Protocols that are applicable
to all publicly-funded universities. The Protocols were
introduced to the higher education sector in the white
paper ‘Our Universities: Backing Australia’s Future (BAF)’
(Nelson, 2003). The National Governance Protocols
were implemented under BAF and became eective on
2 June 2004. The Protocols were intended to improve
governance practices at universities by providing a set of
standards to ensure that governing bodies were eectively
overseeing university operations. It was widely expected
that the new governance practices would improve the
eciency, eectiveness and performance of universities by
creating transparency, responsibility and accountability
(Universities Australia 2010; Williams & Van Dyke 2004),
however, research into the success of governance in the
university sector is scarce. This study contributes to
understanding governance in the university sector. The
key research question addressed in this study is—are
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