Governance Down-under: An Overview of Corporate Governance in Australia

Australia’s small but highly developed corporate and financial systems compare well internationally. Building from a low post-World War 2 base the Australian economy thrived, initially “on the sheep’s back” and latterly from an ever expanding “mine and ship” commodities boom. The non-farm/ mining sectors moved steadily from manufacturing to services. The highly developed financial services sector grew rapidly from the 1990s to offer leading superannuation and unit trust structures and reforms. Corporate governance systems that evolved from a United Kingdom “principles”-based parentage have endured and continued to flourish. Arguably influenced by a stream of US management theory and market-linked “rules”-based governance guidance, Australia has maintained its principles-based governance system and become a leading international participant in good corporate governance notwithstanding many high-profile homegrown corporate scandals and collapses. In a country of avid adopters, corporate Australia has set a leading pace in the separation of the roles of chairman and CEO across its major publicly listed corporations coupled with strong measures for determining non-executive director independence. The “down-under” effect of corporate isolation in the southern hemisphere and the entrepreneurial thirst for scarce capital required to develop a large sparsely populated island continent has undoubtedly driven Australia’s corporate leaders to steer a fine path between the governance paradox that seemingly conflicts the northern hemisphere.