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A principles-based Anglo governance system is not a science but an art

journal contribution
posted on 2008-01-01, 00:00 authored by Suzanne Young, Vijaya Thyil
Anglo governance systems rely of a number of controls to align shareholder and boards of director’s interests. In general they are referred to as market control, regulatory control, and political and cultural control. Agency theory proposes that these control mechanisms are necessary as human nature is such that directors and managers act in a self-interested and boundedly rational manner in decision-making that can result in sub optimality. Notwithstanding that each country within the Anglo system accepts such controls are necessary they have their own foci and priorities, being a product of their own system’s characteristics. This paper through interviewing a number of Australian business executives adds to the academic literature by providing evidence from the field of the important characteristics of the Australian governance system, the drivers of change and the effectiveness of the principles-based approach. It argues that debate needs to move beyond the principles versus rules approach to look at how firms can be provided with more guidance in operationalising some of the principles that appear to be key to governance effectiveness. It concludes that there is a need for a holistic model of governance that is broader than that focusing on the control/legalistic approach; that top management is important in setting and driving the in-firm governance agenda; that the public needs to be informed and educated about governance and its importance; and that disclosure still requires an improvement in quality.

History

Journal

Corporate ownership and control

Volume

6

Issue

1

Season

Fall

Pagination

127 - 137

Publisher

Virtus Interpress

Location

Sumy, Ukraine

ISSN

1727-9232

eISSN

1810-3057

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2008, Virtus Interpress

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