The paper "Corporate Governance of Woolworths Limited and Tokyo Electron Limited" is a good example of a finance and accounting case study. Corporate governance concept has become a major concern for most companies in recent years both locally and internationally. Researches done through the use of international data has proven the fact that firms that are governed in a better manner perform better than those companies that are poorly governed in many key areas (Australian Government Treasury, 2009). Corporate governance relates to the exercise of authority within an organization or a corporation.
It is a framework comprising of the rules, relationships, processes and systems by which and within which the authority is practised in a particular corporation. Its scope includes the mechanisms that ensure that the corporations and those in control are accountable for what happens in the corporation (OECD, 2005: 95). It, therefore, influences the way and the nature of objectives set by the companies, how those objectives are achieved, how the risk affecting the corporation is assessed and monitored and also influences the optimization of the performance of the company.
In essence corporate governance structures that are effective stimulate value creation by embracing innovation, entrepreneurship, exploration and development and also provide systems that ensure accountability and control that measure up with the risks that the company face. Practices that ensure effective corporate governance evolve as the circumstances of a given company changes as those practices need to be tailored to meet the circumstances (ASX Corporate Governance Council, 2010: 3). This study uses two different companies as a case study to examine the practice of corporate governance under two different legal systems; the common law legal system in Australia and the code law legal system in Japan. 2.0 Corporate governance of Australia Australia has a Common law legal system which has its roots in the English tradition of the common law.
This system has much more in common with other countries which majorly were under the English colonial rule. With time the law has evolved its own characteristics that are distinct from those of the other countries. The other countries with the same law include; Canada, Malaysia, United States and India among others.
Similarly, the countries have evolved their legal systems to gain distinct characteristics that differentiate the system from that of the other countries (Kathy and Taylor, 1994: 57). It is within this legal system that corporate governance is exercised by companies incorporated in Australia. Over recent years, corporate governance in Australia has garnered a lot of concern by different stakeholders and even displaced the need for ISO quality accreditation that was a major concern during the 1990s. The reason behind this sharp shift of attention can be attributed to the collapse of large corporations like HIH Insurance in Australia and in the US the collapse of Enron and WorldCom.
These collapses were a clear indication of poor practices of governance in the corporations. Furthermore, the collapse of the respected corporations elicited demand for legislation by different governments that would guarantee good governance of organizations to avoid recurrence of the same. In Australia, it yielded to the legislation of the Corporate Law Economic Reform Program (CLERP) (Linda, 2005: 359). The program was established in 1997 with extreme consultation with the advisory group on business regulatory.
Out of this program, nine different papers in the form of proposals have been released. The third paper was on Directors’ Duties and Corporate Governance (Jean, Mirko and Anil, 2010: 200).
Allen F. & Zhao M., (2007), The Corporate Governance Model of Japan: Shareholders Re Not Rulers, Available [Online]
ASX Corporate Governance Council, (2010), Corporate Governance Principles and Recommendations with 2010 Amendments, 2nd Edition.
ASX, (2001), Disclosure of Corporate Governance Practices: Listing Rule 4.10, Australian Securities Exchange.
Australian Government Treasury, (2009), 2009-02: Corporate Governance and Financial Performance in an Australian Context, Available [online]
Fleming G., (2003), Corporate Governance in Australia, Available [Online] < http://epress.anu.edu.au/agenda/010/03/10-3-A-1.pdf>
Jean J., Mirko B. & Anil H., (2010), Principles of Contemporary Corporate Governance, 2nd Edition, Cambridge University Press, Cambridge.
Kathy L. & Taylor L., (1994), Interpreters and the Legal System, The Federation Press Pty Ltd, Sydney.
Linda S., (2004), Due Diligence and Corporate Governance, Reed Elsevier, United Kingdom.
OECD, (1998), OECD Economic Surveys 1997-1998: Australia, Organization for Economic Co-operation and Development.
OECD, (2011), Board Directors: Incentives and Governing Risks, Corporate Governance, OECD Publishing.
Tokyo Electron Limited, (2010), Annual Report 2010.
Woolworths Limited, (2010), Annual Report 2010.