Ethics and Governance Analysis of Service Streams Limited (ACCT20080)

This capstone project analyzes the ethics and governance of Service Streams Limited, a company listed on the ASX. The research encompasses an executive summary, introduction, and detailed examination of the company's structure, including a corporate governance summary and an evaluation of the board of directors' composition. The project outlines information from the Chairman and CEO reports, summarizes the remuneration report, and determines the board's orientation based on shareholder-agency and stakeholder theories. The analysis interprets the company's communication using legitimacy theory, offering insights into its ethical outlook. The company's services in the energy, water network and communication sectors are discussed. The report provides an overview of the company's operations, board composition, and communication strategies, using financial statements and relevant theories to assess its ethical stance. The conclusion summarizes the findings, highlighting the company's focus on financial performance, stakeholder needs and environmental responsibility.

Running head: ETHICS AND GOVERNANCE
Ethics and governance
Name of the Student
Name of the University
Author Note

ETHICS AND GOVERNANCE
Executive summary:
The paper is developed to conduct research on the governance structure and ethical outlook
of one of the companies listed on ASX. The chosen company for the purpose of analysis is
Service streams limited. There are four requirements that has been addressed in the paper and
this comprised of summarizing the company, reviewing its corporate governance,
determining the board orientation and interpreting the communications made by the company
using legitimacy theory.

ETHICS AND GOVERNANCE
Table of Contents
Introduction:...............................................................................................................................3
Introduce and summarize the company:....................................................................................3
Corporate governance summary................................................................................................3
Evaluating the board of director’s composition:........................................................................3
Outlining the information from Chairman and the CEO report:................................................3
Remuneration report summary:..................................................................................................3
Determining the orientation of board:........................................................................................3
Interpretation of communication of service streams using Legitimacy theory:.........................4
Conclusion:................................................................................................................................4
Reference list:.............................................................................................................................4

ETHICS AND GOVERNANCE
Introduction:
The report is developed with the objective of conducting research on the corporate
governance of the chosen company that is Service streams limited. Evaluation of the
company has been done in terms of its recent history and summarizing its overall information
from the published financial report. Some of the theories that have been discussed include
legitimacy theory, stakeholder theory and shareholder theory. Board orientation has been
discussed in accordance with all the applicable theories. From the analysis, it has been
observed that the board orientation of Service stream shareholder-agency theory and
stakeholder theory of managerial branch.
Introduce and summarize the company:
Service stream holdings private limited is the leading provider of essential network
services of Australia. They are engaged in the development of wide range of services of
network for the operation and development of the energy, water network and communication.
There are three segments in which the company carries out its operation and this includes
network construction, fixed communication and energy and water. The company offer
designs, subsidiaries, installations, maintenance and services for optical, broadband, high
speed data, home, telephony and copper access networks as well as the drafting, planning and
production associated field assessment testing and land access compliance
(servicestream.com.au 2019). Therefore, some of the essential network services offered by
the company comprised of install, service, design, access, build and install.
Operation of service streams is nationwide as it serves more than forty locations and
have active contractors up to 3500 and maintains a workforce of around 1800. Service stream

ETHICS AND GOVERNANCE
is engaged in managing the logistical aspects of local site access which are involved in
maintaining thereby offering servicing to important networks. They are engaged in making
arrangements right from visiting of sites phone tower for the property rights to set up high
speed fiber optical cables. The managerial team is involved in handling projects and they
work and cooperate with the local site supervisors and qualified contractors for installing
fixed line and mobile communication networks infrastructure. Their service stream’s
managers aid on the continued facilities to assist in the operation of network which covers
managing and handling the customer’s inquiries and in managing faults and making suitable
arrangements for repairing and responding and also meter reading of millions of gas and
water meters. Mobile communications, fixed communications varying in the electricity, water
and gas are the crucial networks.
Talking about the gas networks, a chain of network in engaged in providing or aiding
the consumers with household and businesses in Australia. Several companies owns and
operates the network of gas distribution. Hence, it can summarized by saying that service
stream is giving and offering various services for managing and maintaining the gas network
connection. The commitment of the organization lies in providing investment community
with the information on the whole group of service stream (servicestream.com.au 2019).
Information about the company and the holders can be obtained by the shareholders and such
comprehensive information provides them with the assistance in the decision making.
It has become essential to maintain and upgrade the network as the increasing
population of the country is becoming reliable on the broadband and mobile phone coverage.
Service stream is crucial in maintaining and deploying the network owners, infrastructure and
outsourcing the management of lifecycle of network. They are responsible for managing
activities ranging from designing, planning and acquisition to the ongoing maintenance and
support.

ETHICS AND GOVERNANCE
Corporate governance summary
Evaluating the board of director’s composition:
The composition of the board of director of Service steam can be ascertained from the
annual report or the website that depicts the information on the particulars and name of the
directors of the company for the particular year. The chairman of the company is Brett
Gallagher who is a non-independent director at the office of Service stream. The board of
service streams comprised of one chairman, one managing director and four non-executive
director and four executive director that include chairman and managing director. There are
five non-executive director. The chairman of the remuneration and nomination committee is
the independent director of the company. There are eight independent non-executive director
in the board of Service streams.
Outlining the information from Chairman and the CEO report:
The report on the group’s consolidated entity which comprise of Service stream and
its entities has been presented by the report. It includes the information about the directors of
the company which provides the information on their qualification and experience and the
different department handled by each of them. In addition to this, the shareholding of the
directors have been presented that depicts the relevant rights and interest in the company’s
share. The performance rights that are granted to the senior management and the directors
along with the remuneration given to the key management personnel. In this section, highest
remunerated directors is identified and the remuneration report is also presented.
Furthermore, the chairman of the company has presented the report saying the preparation of
the financial statements and notes to the financial statements represents the fair and true view

ETHICS AND GOVERNANCE
of the financial position of the company. It has been declared that the financial statements are
developed adhering to the relevant accounting standards and to the corporate regulations
2001 (servicestream.com.au 2019).
Remuneration report summary:
In the remuneration report presented by Service streams, key management personnel
of the group’s remuneration has been presented. Payment of remuneration to key
management personnel is done after they are classified in terms of senior executive and
senior directors. Making and reviewing recommendation on the arrangements of the
remuneration to the managing director, non-executive director and to the team of executive
management to the board is made by the remuneration and nomination committee. There is a
review conducted by the committee on the annual basis regarding the remuneration that is
paid to senior executive. In addition to this, the principles and policy of the remuneration has
been outlined in the section of framework and policy of executive remuneration. This also
incorporates the discussion on the linkage between the financial performances of the group to
the executive remuneration. It can be observed from the remuneration report that there is
adequate segregation of each and every elements of remuneration such as executive
remuneration table, service agreements, and summary of grants such as share based incentive
plan, short term and long term incentive plan of the group. The report also outlines the
overview remuneration of non-executive directors and the comments and voting that is made
at the AGM of the company (servicestream.com.au 2019).
Determining the orientation of board:
This section demonstrate the likely orientation of the board of Service streams in
relevance to the theories that is applicable.

ETHICS AND GOVERNANCE
Orientation Composition of
board
Focus of board Key
communication
Agency theory-
Shareholder
This theory intends
to define the
relationship
between the agent
and principals
where the agent
represent the
directors of the
company and
principal are the
shareholders. The
running of the
business is directed
by the shareholders
and managed by the
directors of the
company (Ali et al.,
2017). It is expected
by the shareholders
that the directors
The board of directors
composed of majority
of independent
directors that is
employed by the
shareholders
(servicestream.com.au
2019). This is
intended to make
them act in the best
interest of the
shareholders.
The focus of the
board is to make an
improvement in the
financial
performance of the
business entity by
delivering on the
strategic plan. They
are focused on
improving the
market share growth
and service delivery.
It is believed by the
board of Service
streams that the
company is well
placed so that they
can derive the
benefits from the
opportunities of
organic growth.
Moreover, it is also
The information
about the financials
and shareholder
value is
communicated with
the help of report
such as statement of
financial position,
cash flow statement,
statement of
changes in equity,
income statement
and remuneration
report as well.

ETHICS AND GOVERNANCE
would act in their
best interest.
Nonetheless it is not
indispensable for
them to act in the
best interest as they
might fall short of
expectations,
opportunistic
behavior and
succumbing to their
own self-interest.
The theory also
accounts for the
existence of risk
between these two
parties because of
difference in the
business goals and
risk perspectives.
However, it is
expected that the
agents that is
directors would act
according to the
ensured by the
board that the value
of shareholder is
continuously
maximized with the
development of
strategy of capital
management
(Dahlmann, 2019).

ETHICS AND GOVERNANCE
suitability and best
interest of the
owners.
Stakeholder theory-
This theory deals
with the ethical
branch of the
organization. It is
provided by the
perspective of the
stakeholder theory
that interacting
between the people
and the company
helps in create value
and trade. This
provides assistance
to the organization
in conducting out its
activities in an
ethical manner and
which serves the
needs of different
stakeholders of the
company. The
The diversity of the
stakeholder is
reflected by the
appointment of
majority of the
independent directors.
The board of Service
stream composed of
majority of
independent non-
executive director
with such directors
emphasizing
The focus of the
board is to conduct
the activities of the
business in an
environmentally
responsible and an
ethical manner.
Therefore, board
equally places
importance to the
needs of
stakeholders such as
employees and
customers. It is
observed from the
annual report of
Service and streams
the board performs a
balanced review on
the level of demands
from customers and
addressing the
The communication
regarding the
environmental
performance and
addressing the needs
of all the
stakeholders of the
company can be
done by voluntary
disclosures. In
addition to this,
some particular
focuses can also be
made by disclosure
corporate social
responsibility report
that accounts for
social and
environmental
performance of the
company as well
(Granville & Dine,

ETHICS AND GOVERNANCE
companies with the
objective of
maximizing profits
can also adopt
stakeholder theory
(Bosse & Phillips,
2016). It is so
because each and
every stakeholders
would be given
importance in
accordance to their
contributing and
role within the
organization.
Retaining customers
would help in
enhancing their
satisfaction,
employee
satisfaction driving
productivity,
increased
investment from
happy and satisfies
change in the
demand by
developing
appropriate
techniques. In
addition to this,
board takes effort to
retain their key
personnel by
developing the
appropriate
strategies such as
identification of
talent, development
of employees and
successful
programs. This is so
because the
operative
effectiveness of the
group has received
great deal of
contribution from
the key personnel
who are in small
2012). Service
streams has not
separate disclosures
their social and
environmental
performance. The
annual report of the
company
incorporates the
discussion on the
environmental
policy adopted by
the group. Service
streams comply with
the general
obligations under
the regulations and
environmental laws
of state and federal.
There is not any
particular
environmental
regulations under
State,
commonwealth and

ETHICS AND GOVERNANCE
financiers and
creation on positive
impact on the
community would
help in acquiring
best talent
(Nainawat &
Meena, 2013). All
these would drive
the profits of the
business.
proportion relative
to other employees.
Furthermore, the
ability of the
organization to
successfully
complete and secure
field based work is
dependent upon the
resourced pool and
appropriate skilled
sub-contractors. The
subcontractors and
employees of the
company carry out
the hazardous tasks
and their safety is
considered critical
to the board.
the territory law to
which the operations
of the group
complies.
Stakeholder theory-
managerial branch
Recognition of the
stakeholder theory
is also done as the
management theory
Under this
orientation, majority
of the directors at the
board is independent
having the objective
of satisfying the
The focus of the
board is to address
the most powerful
and influential
stakeholders. It is
observed from the
Disclosures for
communicating the
key matters are done
on voluntary basis.

ETHICS AND GOVERNANCE
that helps in
examining the
decisions of the
managers so that the
interest of the
stakeholders can be
balanced (Omran &
Ramdhony, 2015).
powerful
stakeholders.
annual report of
Service streams
limited that the
board is placing
considerable
importance to the
needs of all the
stakeholders such as
customers,
employees
(Ratnawati et al.,
2016). However,
least attention is
given to the
stakeholder such as
community or the
people who are
impacted by the
needs of the
stakeholders. The
most influential
stakeholder group of
the company are
shareholders.
Continuous efforts

ETHICS AND GOVERNANCE
is made by the
organization by way
of developing
appropriate
techniques,
strategies and tools
for creating and
maximizing the
value of
shareholders.
Therefore, from the above discussion on the facts retrieved from the annual report of
Service streams, it is inferred that the board has its orientation from the agency theory of
shareholders and managerial branch of stakeholder theory.
Interpretation of communication of service streams using Legitimacy theory:
This section addresses the interpretation of the communication made by Service
streams using legitimacy theory. For evaluating the communication and legitimacy of the
business, information has been retrieved from the three journal articles provided. The articles
talked about the evaluation of environmental and social disclosure made by the company
using legitimacy theory. The theoretical basis of the process of legitimization of the company
is outlined and how the disclosure of such information enhances the company’s legitimacy. It
was ascertained from the review of the article that the legitimacy of the organization can be
repaired or restored by the positive disclosures under circumstances. The legitimacy theory
provides useful insight when it comes to address the environmental and social performance of

ETHICS AND GOVERNANCE
the company and how the organization embraces the theme of theory in creating and
maintaining legitimacy of organization (Deegan et al., 2002).
The socio economic landscape of the organization is permeated by the concerns of the
organization towards corporate social responsibility. There has been significant growth
concerning the reporting activities of CSR and it is indicated by the legitimacy strategies that
the disclosure about the CSR performance by the companies is dependent upon the CSR
profile. It is highly likely that the company would employ disclosure strategies relating to
expectation and change in the perception of public if they are high profile when it comes to
such disclosures. A reporting organization believes in voluntary reporting on the activities
about the CSR activities if it has adopted by the perspective of legitimacy theory (Adelstein
& Clegg, 2016). Such representation is done is it is felt by the management that the
communities expect to the company to make disclosure about their operations and its impact
on the environment. As per the theory, there exist social contract between the society in
which the company carries operation and the company itself.
From the annual report and the website of the company, it is observed that no
voluntary disclosures are made by the company regarding their social and environmental
performance. It is mentioned by the group in their report that the operation of the business do
not comply with any particular regulation under State, territory or common law for measuring
environmental performance. However, the company has its own environmental policy that
requires the operation to be done in a manner that preserves natural resources, preserves
pollution and conserves the environment. The management system conforms to the
requirements of ISO 14001 along with integrating the considerations of environment in the
process of decision making (Islam, 2017). Furthermore, organization is committed to create
an environmentally sustainable future by responding to the various challenges encountered

ETHICS AND GOVERNANCE
during their operation (Thien, 2015). Nevertheless, there is no presentation of the information
on the environmental performance.
Therefore, from the analysis of the information presented on the environmental performance
of the company, it can be concluded that Service streams has not adopted the perspective of
legitimacy theory as there is not any voluntary disclosure on the environmental performance.
Hence, legitimacy theory has failed to explain the behavior of the managers in addressing the
environmental issues.
Conclusion:
The report addressing the structure of the corporate governance of Service streams
have ascertained that the majority of the directors at the board are independent. In addition to
this, the board focuses on addressing the needs of all the relevant stakeholders who make
significant contribution to the organization. Furthermore, it has also been ascertained that the
company does not make any voluntary disclosure of their social and environmental
performance and thereby the group has not adopted the perspective of legitimacy theory.

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Reference list:
Adelstein, J., & Clegg, S. (2016). Code of ethics: A stratified vehicle for compliance. Journal
of Business Ethics, 138(1), 53-66.
Ali, W., Frynas, J. G., & Mahmood, Z. (2017). Determinants of corporate social
responsibility (CSR) disclosure in developed and developing countries: A literature
review. Corporate Social Responsibility and Environmental Management, 24(4), 273-
294.
Bosse, D. A., & Phillips, R. A. (2016). Agency theory and bounded self-interest. Academy of
Management Review, 41(2), 276-297.
Dahlmann, F., Morrell, K., & Stubbs, W. (2019, July). Corporate Actors and Earth System
Governance: Towards a Research Agenda Informed by Virtue Ethics. In Academy of
Management Proceedings (Vol. 2019, No. 1, p. 19446). Briarcliff Manor, NY 10510:
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Deegan, C. (2002). Introduction: The legitimising effect of social and environmental
disclosures–a theoretical foundation. Accounting, Auditing & Accountability
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Deegan, C., Rankin, M., & Tobin, J. (2002). An examination of the corporate social and
environmental disclosures of BHP from 1983-1997: A test of legitimacy
theory. Accounting, Auditing & Accountability Journal, 15(3), 312-343.
Granville, B., & Dine, J. (Eds.). (2012). The Processes and Practices of Fair Trade: Trust,
Ethics and Governance. Routledge.
Islam, M. A. (2017). CSR reporting and legitimacy theory: Some thoughts on future research
agenda. In The Dynamics of Corporate Social Responsibility (pp. 323-339). Springer,
Cham.
Mili, M., Gharbi, S., & Teulon, F. (2019). Business ethics, company value and ownership
structure. Journal of Management and Governance, 1-15.
Milne, M. J., & Patten, D. M. (2002). Securing organizational legitimacy: An experimental
decision case examining the impact of environmental disclosures. Accounting,
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Nainawat, R., & Meena, R. (2013). Corporate governance and business ethics. Global
Journal of Management and Business Studies, 3(10), 1085-1090.
Omran, M. A., & Ramdhony, D. (2015). Theoretical perspectives on corporate social
responsibility disclosure: a critical review. International Journal of Accounting and
Financial Reporting, 5(2), 38-55.
Pérez, A. (2015). Corporate reputation and CSR reporting to stakeholders: Gaps in the
literature and future lines of research. Corporate Communications: An International
Journal, 20(1), 11-29.

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Ratnawati, V., Abdul-Hamid, M. A., & Popoola, O. M. J. (2016). The influence of agency
conflict types I and II on earnings management. International Journal of Economics
and Financial Issues, 6(4), 126-132.
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Service Stream’s ASX Announcements . (2019). Servicestream.com.au. Retrieved 8 October
2019, from https://www.servicestream.com.au/investors
Thien, G. T. K. (2015). CSR for clients’ social/environmental impacts?. Corporate Social
Responsibility and Environmental Management, 22(2), 83-94.