Corporate Accountability - an Impact on Community Expectations

Corporate Ownership & Control, Vol. 1, No. 1, pp. 26-34, Fall 2003

10 Pages Posted: 2 Mar 2004

See all articles by Shann Turnbull

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance


This paper was presented to generate debate about proposals developed by a 'Corporate Governance Council' set up by the Australian Stock Exchange (ASX) to advise on new guidelines. The paper identifies the invalidity of the assumptions implicit in the Sarbanes-Oxley Act in the US and the recommendations of the Higgs report in the UK into the role of non-executive directors. The paper describes how these assumptions lack validity in regards to the ability of non-executives directors, who meet the highest standards of independence, being able to protect themselves, the company, shareholders, or other stakeholders. Likewise, the invalidity of the assumption that an auditor can be independent when paid by those they audit. Another fundamental flaw in unitary governance is that the information on which directors rely for monitoring and evaluating the business and its management is provided by management. This widespread arrangement is inconsistent with directors performing their fiduciary role with due diligence and vigilance. A contributing factor to the lack of shareholder engagement to control boards is explained by the unethical but legal practice of a director controlling the process of a board being made accountable by chairing shareholder meetings. Lack of shareholder regulation in Australia also arises from corporations having the power to veto pension fund management mandates and a bank based oligarchy of corporate fund management and influence. While Australia leads the world with its requirement that corporations continuously disclose price sensitive information, the identity of share traders and shareholders, that can also be price sensitive information, is not required to be disclosed at the time of a trade, and this protect and so facilitates insider trading. Ways of ameliorating all these problems are suggested in the paper based on the analysis and recommendations presented in A New Way to Govern: Organisations and Society after Enron archived at:

Keywords: Conflicts, corporate governance, democracy, directors, disclosure, oligarchy, plutocracy

JEL Classification: G34, G38, M49, K20, L22, L50

Suggested Citation

Turnbull, Shann, Corporate Accountability - an Impact on Community Expectations. Corporate Ownership & Control, Vol. 1, No. 1, pp. 26-34, Fall 2003, Available at SSRN:

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

PO Box 266 Woollahra
Cell: +61418222378
Sydney, New South Wales 1350
+61293278487 (Phone)
+61280655905 (Fax)

SKYPE: shann.turnbull

Sustainable Money Working Group ( email )

Holyoake House
Hanover Street
Manchester, M60 0AS
United Kingdom

New Garden City Alliance ( email )

113 Guinness Court
London, UK, SE1 3TA
United Kingdom
+44 207 378 1902 (Phone)


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