Corporate Law Reform in Australia: An Analysis of the Influence of Ownership Structures and Corporate Failure

Australian Business Law Review, Vol. 44, No. 1, pp. 18-34, 2016

17 Pages Posted: 18 Feb 2016 Last revised: 12 Jul 2016

See all articles by Vivien Chen

Vivien Chen

Monash University - Department of Business Law & Taxation

Ian Ramsay

Melbourne Law School - University of Melbourne

Michelle Anne Welsh

Monash Business School

Date Written: February 18, 2016

Abstract

Recent studies that have measured the levels of shareholder protection in Australia and compared them internationally have highlighted the relative strength of Australian shareholder protection. However, the question as to why this is so remains unanswered. Theories suggest that the development of corporate law is influenced by corporate ownership structures. Several scholars argue that this can occur when corporate ownership structures provide the means for interest groups to exercise political power and thereby influence law reform or when inefficiencies arising from corporate ownership structures result in changes to corporate law. This study seeks to determine whether there is any evidence of corporate ownership structures contributing to the development of Australian corporate law. The factors that have led to changes in Australian corporate law over time are examined, first by drawing from the leximetric data that measures changes in the strength of shareholder protection in Australia from 1970 to 2010, and secondly by examining three significant reforms occurring over a period of two decades. These reforms are the strengthening of the regulation of related party transactions in 1992 (the reforms prohibited the giving of financial benefits to directors of public companies and their immediate families unless the transaction was exempt or approved by disinterested shareholders), the auditor independence reforms in 2004 and the introduction of the "two strikes" rules relating to remuneration in 2011. The results of this study provide little support for the proposition that corporate ownership structures have influenced the development of Australian corporate law. Several possible alternative explanations for the shape corporate law in Australia are suggested.

Keywords: corporate law reform, corporate ownership, shareholder protection

Suggested Citation

Chen, Vivien and Ramsay, Ian and Welsh, Michelle Anne, Corporate Law Reform in Australia: An Analysis of the Influence of Ownership Structures and Corporate Failure (February 18, 2016). Australian Business Law Review, Vol. 44, No. 1, pp. 18-34, 2016. Available at SSRN: https://ssrn.com/abstract=2734001

Vivien Chen

Monash University - Department of Business Law & Taxation ( email )

Caulfield Campus
Sir John Monash Drive
Caulfield East, Victoria 3084
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Michelle Anne Welsh

Monash Business School ( email )

Wellington Road
Clayton, Victoria 3168
Australia

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