Directors' Conflicts: An Empirical Study

Abstract

This chapter has three objectives. First, it addresses some theoretical issues associated with the regulation of directors' conflicts of interest. Second, it reviews the Australian legal framework for regulating directors' conflicts. Third, it presents the results of an empirical study of directors' conflicts in Australia. The study covered disclosure of financial benefits between large Australian companies and their directors. The purpose of the study is to provide some insight into the types of matters which potentially involve directors' conflicts. Sixty-four per cent of the companies in the sample disclosed at least one director-related transaction. By dollar amount, the largest category of director-related transactions is goods or property provided to a company by a director or a director-related entity. Another common category of director-related transactions is services provided to a company by a director-related entity. The chapter identifies the types of services provided by directors by dollar amount and classifies the services according to their type (e.g. management services, legal services and consulting services).

JEL Classification: K22