Impact of Corporate Governance and Leadership on Corporate Failures

ACC620 Contemporary Issues in Accounting
Impact of corporate governance and leadership on corporate failures
Semester 2 2018
Research Proposal
Student Name:
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Introduction
The economic costs associated with the failure of business are relatively large. The major
parties that are affected severely because of business failure include the capital providers,
government, employees and the management (Spaliara & Tsoukas, 2017). The term
“corporate failure” refers to the discontinuation of the operations of a company that further
leads to an inability to reap revenue or profit or pay the expenses of business. In other words,
corporate failure is a term that is used for the inability of the organizations, to conform to the
strategic path that was developed for achieving the legal and financial objectives (Salman et
al., 2015).
The corporate failures occur usually because of the incompetence, poor management and the
bad marketing strategies. There are a number of causes behind a corporate failure. This
research is one of the efforts to explore the major causes behind the corporate failure (Appiah
et al., 2015). In this context, the major research question for this research is “what are the
major factors that influence corporate failure?”
Practical Motivation
This research will deal with one of the important issues of accounting – corporate failure.
Organizations are now operating in a highly dynamic business environment and are exposed
to a number of threats that can lead to failure of the organizations. The issue of corporate
failure is of high interest for managers, accountants, general public and regulators. Corporate
failures affect the whole organization including all its internal and external stakeholders such
as customers, employees, shareholders and government (Kusumaningtias et al., 2016). This is
because corporate failures result in huge financial losses. The financial crisis hits the
organization that is operating in a wider economy, and the number of organizations that are
filing for the insolvency is also increasing. The contemporary issues of corporate failure are

important for the organization’s stakeholders and the researchers who are exploring the issues
of accounting. This is because it is one of the complex issues that leads to closure and
collapse of an organization (Lakshana & Wijekoon, 2012).
Theoretical Motivation
The topic that is being addressed in this research which is corporate failure is subjected to
research and discussion by the accountants, equity shareholders, bankers, creditors,
management experts and the marketing experts. In addition, this research topic has also
attracted the attention of international and local commentators, as the corporate failures have
the potential to destabilize the economic system, by increasing the levels of unemployment,
poverty, increase in crime rates and reduced tax earnings. There is however, a lack of studies
that have been conducted in Australia regarding the impact, causes and factors influencing
the corporate failure. This research is one of the efforts to contribute in the existing theory of
corporate failures or extend the research on corporate failures.
Literature Review
Lakshana & Wijekoon (2012) conducted a study on determining the influence of corporate
governance characteristics on the corporate failures. Some of the major characteristics of
corporate governance that are related negatively with the corporate failure include the size of
the board, directors, audit committee and the board members. On the other hand, the findings
of study indicate that duality of the CEO is positively associated with likelihood of corporate
failure (Lakshana & Wijekoon, 2012).
Allen, Imbierowicz, & Rauch (2016) also conducted a study to determine the role of
corporate governance in the financial crisis and the corporate failures. The authors indicated
that the ownership structure is one of the major elements of corporate governance that have