Financial Aspects of Corporate Governance
Financial policy and corporate governance are inexorably linked. The choice of how an organization is financed dictates much of what the governance mechanisms selected look like. Major financial events such as initial public offerings and takeovers are associated with debate about the effectiveness of various governance mechanisms. For example high profile cases of financial distress, such as Ansett, HIH Insurance and One-Tel give rise to concerns about the effectiveness of outside directors, the link between governance and executive compensation, and the extent to which compensation reflects performance. Teams led by senior researchers in the Schools of Accounting and Economics and Finance are currently examining these issues, and this research will form an important part of the overall program. This represents the application of financial economics to these issues, and is consistent with the thrust of leading finance and accounting scholars worldwide. Research of this type can also inform debate about appropriate regulatory structures, as well as provide the basis for international corporate governance.