Strengthening corporate governance regulations

Abstract

Purpose

To discuss how to develop best practices and to enforce effective guidelines for corporate governance.

Design/methodology/approach

Investigates the ASX Corporate Governance Council's “framework” for improving corporate governance practices. Addresses the importance of effective corporate governance regulations for preventing corporate malfeasance and a loss of confidence by shareholders. Two key corporate governance principles outlined in the ASX's Corporate Governance Guidelines, “make timely and balanced disclosure” and “respect the rights of shareholders,” are examined. Provides a case study of how the CEO of Aristocrat, a poker machine manufacturer and operator, failed to offer timely and balanced disclosure and otherwise demonstrated incompetence and disrespect for shareholders, causing significant financial distress for the corporation and investors.

Findings

For essential corporate governance principles to be effective, they cannot merely serve as “guidelines” to public corporations, but instead must be requirements that are prudently monitored with stringent penalties attached if breached.

Originality/value

Highlights the importance of effective corporate governance regulation in the prevention of future corporate scandals and collapses.

Citation

Proimos, A. (2005), "Strengthening corporate governance regulations", Journal of Investment Compliance, Vol. 6 No. 4, pp. 75-84. https://doi.org/10.1108/15285810510681900