Corporate Governance Issues in a Globalising World

governance in a globalising world

GOVERNANCE IN A GLOBALISING WORLD: 1
Contents
Outlining and summarising the key arguments made in the given article......................................2
Discuss the corporate governance issues and their importance.......................................................3
Important factors that influences corporate governance issues.......................................................4
Mechanisms of corporate governance..............................................................................................5
Various theories relevant to the issue of social licencing are............................................................7
Legitimacy theory..............................................................................................................................8
Social Contract theory.......................................................................................................................8
Stewardship theory...........................................................................................................................9
Stakeholder Theory...........................................................................................................................9
References..........................................................................................................................................11

GOVERNANCE IN A GLOBALISING WORLD: 2
Outlining and summarising the key arguments made in the given article
The commonwealth bank chief executive named David Murray agreed to become AMP
chairman. New corporate rules have overweighted to avoid ASX corporate principles.
Murray announced in the Australian Financial Review that he would not follow ASX
corporate governance that was currently updated with various proposals. This proposal
includes the concept of gaining social licence to operate business. He believes that these
corporate principles create distraction so that, they can focus on bigger strategic issues. The
concept of social licencing was not given preference by renowned Australian Institute of
Company directors (Bhatt, and Bhatt, 2017). They argue that the existence of laws and ethics
are enough and imposing a new concept of social licence may create unnecessary obstacles
and risk (Bhimani, 2008). Whereas, the law council of Australia, Australian Financial Market
Associations, Chartered Accountants, and Individual director and various shareholders are
asking for change (Kathleen, and Wilburn, 2011).
The principle of social licence is issued by CGC (corporate Governance Council) especially
for the business and investors groups. The concept of “Social licence” has been made legally
mandatory for top listed companies to respond to social licence from investors. On the other
side former chairman ASX Maurice Newman questions the concept of social licence
(Hanrahan, 2016). They argued that rather than distracting due to new concept of social
licencing, an organisation should focus on reducing the cost and satisfying the customers.
AICD (Australian Institute of Company Directors) support changes for climate risk and
gender targets. If a corporation engages in gas exploration activities near rural areas, it can
suffer from legal issues. However, if the company has regulatory approvals and licencing
from the authority.

GOVERNANCE IN A GLOBALISING WORLD: 3
AICD (Australian institute of company directors) says that in this case, there are opposing
views on whether the investment would start to become socially obliged behaviour (Bury and
Leblanc, 2007). According to Armour, the shareholders should address the issues that are
emerging from Hayne royal commission and APRA (Australian Prudential Regulation
Authority) report on Commonwealth Bank. The case is-
 In 2013, the audit committee of CBA (Commonwealth Bank of Australia) have
noticed that they have high potential risk for business. The bank has repeated issues
with the anti-money laundering and terrorism-countering financing rules. In 2015, it
was noticed that the issue is not yet resolved die to lack of effective ownership of
group procedures (Braddon, and Hooper, 2018).
Discuss the corporate governance issues and their importance
Awareness regarding corporate governance is both a source of protecting and creating wealth
for the shareholders. However, for the last decades, the situation of corporate collapsing due
to failure of several high profile governance has been drastically increasing. Constant
increasing cases related to fraud, incompetence to accomplish judicial rules and regulations
enforced strict corporate governance. The royal commission identifies failure of governance
activities in form of mismanagement, breach of director obligation, and various accounting
issues (Taxmann, 2018). The collapse of bank of credit and commerce international led
British accounting bodies and London exchange to establish various corporate governance
committee to implement updated governance rules. There are various cases hampering the
society`s and shareholders interest-
 In 2004, National Australia Bank disclosed that it had been suffering losses due to
unauthorised trading in the foreign currency nearly about 360 million. Continuous
issues related to failure of bank operations led to more scandals such as 1.4 billion