Corporate Governance Reform in Australia: A New Institutional Approach
| Published date | 01 January 2019 |
| Author | Bernard Mees,Sherene A. Smith |
| DOI | http://doi.org/10.1111/1467-8551.12298 |
| Date | 01 January 2019 |
British Journal of Management, Vol. 30, 75–89 (2019)
DOI: 10.1111/1467-8551.12298
Corporate Governance Reform in Australia:
A New Institutional Approach
Bernard Mees and Sherene A. Smith1
Tasmanian School of Business and Economics, University of Tasmania, Private Bag 84, Hobart, TAS 7001, and
1School of Management, RMIT University, 124 La Trobe St, Melbourne, VIC 3000, Australia
Corresponding author email: bernardmees@icloud.com
From an international perspective, Australiahas been one of the leading jurisdictions for
corporate governance reform. Its first corporate governance code predates the Cadbury
Report, and Australia is also one of the few countries internationally to have been only
marginally aected by the recession that ensued after the Global Financial Crisis. Con-
siderable governance reform has occurred since 2007–8 in Australia, however; much of it
occasioned by pressure broughtto bear by institutional investors as a reaction to both tra-
ditional governance failings and also social and environmentalconcer ns such as a growing
awareness of climate change. Institutional influence is primarily associated with the com-
pulsory retirement income system that emerged in the 1980s in light of an economy-wide
union campaign. While governance structures are becoming more homogenous, institu-
tional logics reflecting trustees’ concerns are driving and shaping this ongoing process.
A new approach to corporate engagement has emerged under the influence of investor
representative bodies such as the AustralianCouncil of Superannuation Investors that is
driving corporate governance change.
Introduction
Corporate governance is a term associated with a
movement to reform the behaviour of boards and
the senior executives of large, publically quoted
corporations (Chens, 2015; Mees, 2015). Of-
ten reduced to issues of regulation and reporting
(Shleifer and Vishny, 1997) or economic constructs
such as agency theory (Jensen and Meckling,
1976), the international movement to reform cor-
porate governance has traditionally experienced
its most active periods after significant financial
crises. The largestsecurities crisis in living memory
is that which occurred in 2007–8, sparked by the
collapse of the American investmentbank Lehman
The interviews employedin this paper were undertaken as
part of the Workers’ Capital project at RMIT, funded by
the Australian Institute of SuperannuationTrustees, sup-
ported by Industry Super Holdings and the PhD project
‘Board Capital: A Resource for Firm Performance’,
funded by an Australia Awards Scholarship awarded by
the Australian Government’s Department of Foreign Af-
fairs and Trade. Some of the interviews were undertaken
by or with Cathy Brigden and AronPaul.
Brothers. Given previous reactions to financial
crises, considerable momentum for reform would
be expected to havebeen generated by the banking
emergency of 2007–8 and the period of widespread
economic recession that followed in its aftermath.
Very little regulatory reform has occurred in
Australia since 2007–8, but corporate governance
has still undergone considerable change under the
influence of institutional investors. Australia has
long been unique among common-law jurisdic-
tions in having compulsory employer funding of
retirement benefits (Mees and Brigden, 2017). In
the UK, ‘automatic enrolment’ provisions were
included in the Pensions Act 2008 (with auto-
enrolment compulsory from 2018), but Australia
has a much more mature private retirement sav-
ings system given its three decades of mandatory
superannuation provision. Internationally, stock
holdings by retirement funds tend to be dispersed
(Sch¨
afer and von Arx, 2014), but seem to correlate
with higher commitment to environmental and
social issues by firms in which they have holdings
(Dyck et al., 2016; McCahery,Sautner and Starks,
C2019 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
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