Business Law Report: Corporate Culture, Laws, and Case Studies

This report examines the concept of corporate culture, defining it as the behaviors and beliefs that govern employee interactions and business transactions within a company. It explores how corporate culture is reflected in various aspects of operations and emphasizes its strong link to corporate governance. The report then delves into the legal provisions in Australia, including the Australian Securities, Investment Commission Act 2001 and the Corporations Act 2001, that aim to ensure ethical corporate behavior. It highlights the guidelines provided to organizational managers, such as the prohibition of deceptive practices. Despite these laws, the report presents case studies like the Sino Australia Oil and Gas Limited scandal and Storm Financial Limited to illustrate instances of corporate fraud and failures in risk management. The report concludes by emphasizing the importance of a healthy corporate culture that adheres to governance principles, legal provisions, and corporate social responsibility, ultimately benefiting both the company and its stakeholders. The report utilizes references to support its arguments.

Running head: BUSINESS LAW
Business Law
Name of the University:
Name of the Student:
Author Note:

1BUSINESS LAW
Corporate culture can be referred to the behaviors and beliefs, which determine how
the employees of any company interact with their organizational management and handle
business transactions. Corporate culture is often implied and developed organically over the
time from cumulative traits of individuals, hired by the company. The culture of the company
gets reflected in its business hours, dress code, office setup, turnover, employee benefits,
clients’ treatment, hiring decisions, client satisfaction and other aspect of the operations. In
addition to this, the culture comprises the norms, vision, location, language, habits, symbols,
values and belief of the corporation1.
The organizational or corporate culture can be defined as the emergence of any
complicated state that cannot be calculated. This results after combining certain elements of
the corporate world. Moreover, there are three ingredients that are manageable in relation to
the corporate culture. These include customers, work and employees. In simpler terms,
corporate culture is related strongly to the corporate governance that directs the organizations
to operate in an ethical manner and taking the stakeholders’ interests into consideration.
Furthermore, the corporate culture also focuses upon the organizational managers and
emphasizes on how the operations are being carried out2.
There are various laws which ensure a healthy and good corporate culture.
Particularly, in Australia, these provisions comprise the Australia Securities, Investment
Commission Act 2001, Corporation Act 2001, corporate governance principles and rules
provided by Australian Securities Exchange (ASX). As per Corporations Act, the
organizational managers should be provided with several guidelines. These guidelines must
1 Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The value of corporate culture." Journal of Financial
Economics 117.1 (2015): 60-76.
2 Hickman, Craig R., and Michael A. Silva. Creating excellence: Managing corporate culture, strategy, and
change in the new age. Routledge, 2018.

2BUSINESS LAW
be strictly followed by the organizational managers while managing the employees in
Australian companies. Under the guidelines, companies or corporations should not deceive
their creditors and provide correct information to them. The managers of the organizations
should not engage into misleading or deceptive activities3. Therefore, they need to be careful
at the time of performing their responsibilities or functionalities.
The managers of the corporations should never mis-utilize or mis-interpret the
information or the position for deceiving the creditors and personal interests. According to
the principles of Australian Securities Exchange, the organizations need to function in an
ethical manner and also have certain practices of risk management within the workplace.
However, there have been several frauds in the corporate world of Australia, in spite of all
these laws or principles.
This can be demonstrated by taking the Sino Australia Oil and Gas Limited
Company’s scandal into consideration. The company was the subsidiary company of an
organization based in China. It came into notice, when the company started providing fake as
well as false information to its internal and external public by offering them public services,
in order to get hold of the public economy. The director of the company Mr. Shao, continued
with his illegal activities by transferring around 7.5 million dollars of public money to
Australia. In the meantime, ASIC involved into this matter and saved 7.5 million dollars. The
issue was then directly taken to the court, where the director of the company had to pay a
heavy fine. Moreover, he got banned from the managerial position for around two decades4.
3 Apra.gov.au. 2018, http://www.apra.gov.au/aboutapra/Pages.aspx. Accessed 20 May 2018.
4 Asic.gov.au. 2018, http://asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-255mr-
court-finds-against-sino-australia-oil-and-gas-limited-and-its-former-chairman-tianpeng-shao/. Accessed 20
May 2018.

3BUSINESS LAW
A similar instance of forgery took place when Storm Financial Limited got involved
into a corporate fraud case. The company was providing wrong information to the poor
investors who had to mortgage their properties in order to get investment, as directed by the
corporation. There were other problems too where four people died due to a defect in a ride at
Dreamland Amusement Park. It is evident that the company lacked appropriate risk
management systems as it completely failed to inform their family members for over 24
hours5.
This whole incident gave rise to controversies and chaos as the family members of the
deceased had to face hardships. Therefore, it can be derived from the instances that a healthy
corporate culture needs to be effective and efficient. The corporate culture should ensure
governance principles as well as legal provisions. The culture should be enhanced by
complying with the principles from a broader view of the corporate social responsibility and
ethics for ensuring the company’s best interests. This should also involve the needs and
interests of the stakeholders6. In addition to this, if the corporations operate in accordance
with these principles, their value will automatically increase within the society.
5 Abc.net.au. 2018, http://www.abc.net.au/news/2018-03-22/storm-financial-founders-fined-140k-over-800m-
company-collapse/9576418. Accessed 20 May 2018.
6 Zingales, Luigi, and James Poterba. "Causes and Consequences of Corporate Culture." NBER Books (2015).

4BUSINESS LAW
References
Abc.net.au. 2018, http://www.abc.net.au/news/2018-03-22/storm-financial-founders-fined-
140k-over-800m-company-collapse/9576418. Accessed 20 May 2018.
Apra.gov.au. 2018, http://www.apra.gov.au/aboutapra/Pages.aspx. Accessed 20 May 2018.
Asic.gov.au. 2018, http://asic.gov.au/about-asic/media-centre/find-a-media-release/2016-
releases/16-255mr-court-finds-against-sino-australia-oil-and-gas-limited-and-its-former-
chairman-tianpeng-shao/. Accessed 20 May 2018.
Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The value of corporate culture." Journal
of Financial Economics 117.1 (2015): 60-76.
Hickman, Craig R., and Michael A. Silva. Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge, 2018.
Zingales, Luigi, and James Poterba. "Causes and Consequences of Corporate Culture." NBER
Books (2015).