In my latest Economics Explored podcast episode, I speak with Stephen Howell, Principal Advisor of Effective Governance, part of the Hopgood Ganim Advisory Group, regarding the importance of good corporate governance to a well-functioning economy.
One of the leading textbooks on corporate governance Directors at Work notes:
The dot-com bubble of 2000 led to the demise of Enron, WorldCom, HIH Insurance, One.Tel and Ansett Airlines, among others, while the Global Financial Crisis of 2008 resulted in casualties such as ABC Learning Centres, Centro Properties Group and Lehman Brothers. As each crash occurred, the calls for better corporate governance have increased. The question – where were the directors? – has been a common refrain after each economic crisis.
As Stephen and I discuss, the Royal Commission into banking revealed some big recent failures of corporate governance in Australian banks, notably at NAB, whose chairman, former Treasury Secretary Ken Henry, was eviscerated by Senior Counsel Rowena Orr, a graduate of UQ Law School, incidentally. Stephen and I also discuss corporate social responsibility, beginning with a consideration of Milton Friedman’s doctrine that companies should be run solely for the interests of their shareholders. Finally, we discuss broader governance issues in this time of COVID, including the massive failure of the Victorian Government on hotel quarantine.
Incidentally, the book Directors at Work has EG colleagues of Stephen’s as co-authors, including Director James Beck and Jennifer Tunny, my mother. If you’re interested in corporate governance or sitting on a board as a director, it is definitely a great book to read.