Corporate Governance and Company Directors: Are they Alice in Wonderland?

Abstract

Corporate governance is not a new concept. In fact the last 15 years has seen a surge in academic publications and case law in relation to the lack of corporate governance. Research Gap is that Company Directors are attending a “mad hatters’ tea party” when it comes to the implementation of governance codes, with the recent spate of court cases involving breaches of directors fiduciary duties. Methodology used was review of case law using archival data. This research looks at the type of case law issues of corporate governance in Australia and in particular accountability, and relates the case law to the Corporations Act (2001) to find where company directors are getting corporate governance wrong. The findings indicate that perhaps the “if not why not” prescription, should not be an option for corporate governance for some Boards. For some Boards the invitation from Alice to jump down the rabbit hole into creative accounting and bad board behaviour at the “mad hatters’ tea party” is just too great an incentive. Implications show that this review of important corporate governance case law will assist Boards to concentrate their efforts on improving the environment they operate in, as good governance equates to good business. “In another moment down went Alice after it, never once considering how in the world she was to get out again.” Carroll, Lewis (1865) Alice's Adventures in Wonderland