Briefing to Academic Board 1 August 2013

UTS BUSINESS SCHOOL

Corporate Governance is the system by which corporations are directed and controlled.

UTS Centre for Corporate Governance brings together researchers from accounting, finance, management and legal backgrounds.

The corporate governance structure and processes specify the distribution of rights and responsibilities among different participants in the corporation. The aim is to align as nearly as possible the interests of individuals, corporations and society

The UTS Centre is engaged in major research projects with industrial and professional partners, teaching and curriculum development, academic publications and conferences, and is also dedicated to policy development and legal reform.

Introduction

Corporate Governance

ASX 2,122 Listed

corporations 2013 (Market Cap $1.4 trillion)

Super Funds 399 Funds + .5

million SMS

(Sector Assets $1.57

trillion) (ASFA 2013)

Businesses 2.1 million

(Companies, Sole

Proprietorships, Trusts,

Partnerships)  (ABS 2012)

Government

BusinessEnterprises

598(Utilities, ABC, NBN)

Governance of

Government

Bodies(statutory and non-statutory bodies,

companies)

Centre Launch Commonwealth Bank 2003Maurice Newman, Chair of ASX; Catherine Livingstone, Chair of CSIRO, former CEO of Cochlear; Sir Adrian Cadbury former Chair & CEO of Cadbury Schweppes; and David Murray CEO of Commonwealth Bank

The Two Primary Functions of the Board

Reporting to Shareholders, Ensuring statutory/Regulatory compliance, Reviewing audit reports

Reviewing key executive performanceReviewing business resultsMonitoring budgetary control andCorrective actionsR

Reviewing and initiating strategic analysis/ Formulating strategySetting corporate direction

Approving budgetsDetermining compensation policy For senior executivesCreating corporate culture

Outwardlooking

Inwardlooking

Providingaccountability

Strategyformulation

Monitoring andsupervising

Policymaking

Approve and work withAnd through the CEO

Past and present focused Future focused

Outwardlooking

Inwardlooking

Providingaccountability

Strategyformulation

Monitoring andsupervising

Policymaking

Approve and work withAnd through the CEO

Past and present focused

Future focused

. Source: F. Hilmer & R.I. Tricker (1991)

OUTWARDLOOKING

INWARDLOOKING

Providing Accountability Strategy Formulation

Monitoring and Supervising Policy Making

PAST AND PRESENT FOCUSED FUTURE FOCUSED

Source: R. I. Tricker 2012

CONFORMANCE PERFORMANCE

Framework for Analyzing Board Activities

Corporate Governance Without Strategy Leads to Paralysis....

SStrategy Without Corporate Governance Leads to Recklessness...

PAST Changing Role of Boards & Directors National Survey (ARC Linkage National

Law firm) Board and Director Evaluation (ACSI Funded) Corporate Governance & CSR Indices (Nielsen Funded) Restructuring Governance of the Health Service (NSW Health Funded) Regulation of Small Corporations (ARC Linkage With Federal Treasury) Analysts Forecasts and Audit Quality (Capital Markets CRC Funded) Anglo-American CEO Compensation

PRESENT Diversity of Boards (EOWA/WGEA & ANZ Bank & Boardroom Partners Funded) Corporate Governance of Not-for-Profit Sector (With CompliSpace) International Comparative Corporate Governance (DFAT Funded) Substance of Sustainability (Catalyst Funded)

FUTURE Governance and Regulation of Finance Centre of Excellence/ARCs Corporate Purpose: Entrepreneurial and Responsible

(UNSW, ANU, Melbourne, Seattle, Berkeley, Cornell, Oxford, Cambridge, Harvard)

Investment and Innovation (Massachusetts and Sussex) Corporate Governance, Responsibility and Sustainability

Selected Research Projects

22 HDR completions (2004-2012)

110+ per annum postgraduate MBA, EMBA and Masters students on Corporate Governance and Sustainability subjects

Early Career Researchers

Governor-General Launches the 2012 Census on Women in Leadership

Judith Fox, member of the ASX Corporate Governance Council and director of policy for Chartered Secretaries Australia; Elizabeth Bryan, Caltex chairman and Westpac board member; Christine Holgate, Blackmores CEO and MD; and Verity Firth, former state government MP, Minister for Education and CEO of the Public Education Foundation Ltd. The panel was moderated by journalist Deborah Cameron.

UTSpeaks March 2013

UTS Symposium Tokyo Stock Exchange (April 2013)

Justin O’Brien, Director of the Centre for Law, Markets and Regulation UNSW; Christina Ahmadjian former Dean of Hitotsubashi University Business School and member of board of Mitsubishi Heavy Industries; Takaya Seki Director of CorporatePractice Partners and adviser to the Tokyo Stock Exchange and Japan FSA

The paradox that after two decades of corporate governance reform governments and corporations remain fully engaged in the governance challenges posed by the transformation of markets and technologies

“We have not yet fully understood the causes of the last financial crisis, and not begun to prepare for the next one.” (Professor Douglas Arner, HKU, 2013). Dodd-Frank Wall Street Reform Act in US still only half way through implementation, with no resolution of the proposed Volker Rule to divide investment and retail banking. “Too big to fail, too big to manage” still reality in finance sector.

The US Financial Stability Oversight Council (2013) reported on the unfolding Libor rate setting court cases: “Recent investigations uncovered systemic false reporting and manipulations of reference rate submissions dating back many years.”

The UK Parliamentary Commission on Banking Standards (2013) “Too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility... Remuneration has incentivised misconduct and excessive risk-taking, reinforcing a culture where poor standards were often considered normal.”

The integration of corporate governance and sustainability is still to be achieved: while corporate policy has become more sophisticated, implementation remains in its infancy.

Cycles of Corporate Governance Reform

The Asia Pacific Innovation Network (APIC) was formed in January 2010, to bring together researchers and practitioners in the Asia Pacific region interested in discovering and integrating knowledge regarding the legal, governance, managerial, technical and economic elements of innovation. APIC conducts regular workshops, conferences and events in the Asia Pacific region focusing on research in innovation.

In increasingly internationalised and competitive economies, innovation is at the heart of the value creation process. Innovation may involve the discovery and application of new products, services, processes, systems, or business and organisational models. The governance of innovation is critical at every stage.

Earlier APIC Conference were held in Melbourne (2010); Singapore (2011); Seoul (2012) and Taipei (2013). Future APIC Conferences are projected for Taipei (2013); Sydney (2014) and Wellington (2015). Each conference attracts keynote speakers from agencies such as the World Bank; OECD; US Patent and Trade Office; and Centre for European Economic Research.

Klick-on-Koalas

Asia Pacific Innovation Conference (2014)