Case Analysis of Commonwealth Bank of Australia

Student name
INSTITUTIONAL AFFILIATION(S) |
Corporate
Governance & Ethics
CASE ANALYSIS OF COMMONWEALTH BANK OF AUSTRALIA

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Table of Contents
Executive summary....................................................................................................................2
Introduction................................................................................................................................3
Critical analysis of corporate governance and ethics failure in CBA........................................3
Corporate governance failure.................................................................................................5
Ethical Failures.......................................................................................................................7
Stakeholder’s consideration....................................................................................................8
Utilitarianism..............................................................................................................................9
Kantian deontology..................................................................................................................10
Recommendations/Conclusions...............................................................................................11
References................................................................................................................................12

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Executive summary
Many practical studies have been made in past few decades that investigates
relationship between corporate governance and corporate performance globally. However,
similar study in case of Commonwealth Bank of Australia (CBA) is very rare. In Australia,
study made on such topics are more based upon qualitative research after being referenced
from history concerning corporate governance and ethics using legal documents (Australian
Prudential Regulation Authority, 2018). As this report aims to address the relationship
between corporate governance and corporate performance, literature review and empirical
study have been conducted after analysing issues in corporate governance at CBA. This
report will develop a research analysis related to corporate governance and corporate
performance along with identifying how corporate governance principles and ethics failed in
the case of CBA. This report will use Kantian deontology and Utilitarian perspective to
discuss ethical issues faced by CBA along with making recommendations through which the
corporate issues faced by CBA could have minimised.

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Introduction
Research claims that good governance leads financial institutions to high
performances. A study made by Grace, Vincent, & Evans (2018) claims that there is a close
and positive relationship between firm’s performance and corporate governance. The authors
find that adaptation to corporate governance can significantly influence financial institution’s
performance level and profit ratio, arguing that they interplay between country level
governance and firm mechanisms that enriches the understanding of national systems and
comparative corporate governance. Moreover, Islam, Sathye, & Hu (2015) finds that in
literature, corporate governance practices within banks differ from non-banking firms and
therefore suggest that separate analysis shall be made for banks’ corporate governance
analysis since asymmetry of information has become a serious issue in banking sector more
than other industries. Given financial institutions plays an intermediary role in country’s
economy, researchers assert that corporate governance is more important for banks
performance than other cooperation’s. Second, strand of literature states that how good
governance practices can establish strong economic condition and financial development of
the country. For example, investments made in financial sector are regarded more secure and
productive that adds value to stakeholders’ funds as well as banks value. Hence, it can be
summarised that there is a significant relationship between economic outcomes and
disclosure regimes in banking sector (Aktan, Turen, Tvaronaviciene, & Celik, 2018).
Critical analysis of corporate governance and ethics failure in CBA
Australia has been historically following British common law and framework while
continuing this tradition for corporate governance also. This itself provides a framework for