Corporate Governance in Relation to the Collapse of Ansett Airlines and Harris Scarfe
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Corporate Governance and the Nature of Accounting in relation to the collapse of Harris Scarfe and Ansett Airlines.
The corporate collapses of the last decade have had both positive and negative effects on Australia, especially the collapse of Ansett Airlines and retailer Harris Scarfe in 2001. These collapses have been positive in that they have highlighted the importance of corporate governance and the need for guidelines for companies to follow. These collapses along with other major ones across the world like Enron and WorldCom have triggered a global consciousness to clear out the problems.
Since the collapses in Australia there has been increased focus on disclosure and the independence of auditors and directors and the need for the board to act in the best interests of the stakeholders, not themselves. From research it was found that the demise of Ansett was due to the lack of the board members to act favourably to the stakeholders. The demise of Harris Scarfe was due to financial issues and the lack of auditor independence.
After these collapses the Australian government introduced a new reform (CLERP 9) to provide guidelines on corporate governance issues. Although the new regulations are not as strict as the US version (Sarbanes- Oxley Act), they have decreased the effect of corporate governance issues on companies.
Corporate governance has become one of the most commonly used phrases in the current global business vocabulary. It is defined as the framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in the firm's relationship with its stakeholders (business dictionary.com, 2009). It is the system by which companies are directed and controlled for the benefit of shareholders (Murry Steele, 1999). Good corporate governance is vital to the integrity of corporations, financial institutions and markets, and central to the health of our economies and their stability...
The corporate collapses of the last decade have had both positive and negative effects on Australia, especially the collapse of Ansett Airlines and retailer Harris Scarfe in 2001. These collapses have been positive in that they have highlighted the importance of corporate governance and the need for guidelines for companies to follow. These collapses along with other major ones across the world like Enron and WorldCom have triggered a global consciousness to clear out the problems.
Since the collapses in Australia there has been increased focus on disclosure and the independence of auditors and directors and the need for the board to act in the best interests of the stakeholders, not themselves. From research it was found that the demise of Ansett was due to the lack of the board members to act favourably to the stakeholders. The demise of Harris Scarfe was due to financial issues and the lack of auditor independence.
After these collapses the Australian government introduced a new reform (CLERP 9) to provide guidelines on corporate governance issues. Although the new regulations are not as strict as the US version (Sarbanes- Oxley Act), they have decreased the effect of corporate governance issues on companies.
Corporate governance has become one of the most commonly used phrases in the current global business vocabulary. It is defined as the framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in the firm's relationship with its stakeholders (business dictionary.com, 2009). It is the system by which companies are directed and controlled for the benefit of shareholders (Murry Steele, 1999). Good corporate governance is vital to the integrity of corporations, financial institutions and markets, and central to the health of our economies and their stability...