Bank corporate governance in Australia: Is there a conflict between the existing corporate culture and the Anglo‐Saxon model of corporate governance?

• Date: 01 January 2021
• DOI: http://doi.org/10.1002/jcaf.22475
• Author: Erick Rading Outa,Shawgat Kutubi
• Published date: 01 January 2021

J Corp Acct Fin. 2021;32:145–150. wileyonlinelibrary.com/journal/jcaf © 2020 Wiley Periodicals, Inc. 145

COMMENTARY

Bank corporate governance in Australia: Is there a conflict

between the existing corporate culture and the Anglo-Saxon

model of corporate governance?

Erick Rading Outa | Shawgat Kutubi

Asia Pacific College of Business and Law,

Charles Darwin University, Darwin,

Australia

Correspondence

Erick Rading Outa, Asia Pacific College of

Business and Law, Charles Darwin

University, Darwin, Australia.

Email: erick.outa@cdu.edu.au

Abstract

This article identifies bank governance deficit as a contributor to the mis-

conduct identified in the recent Banking Royal Commission into misconduct

in banks, superannuation, and financial services in Australia. Literature

review has been conducted to identify the key issues of theory, frameworks,

sources of corporate governance (CG), CG models, board skills, and age as

factors in CG. The analysis finds that some of the governance requirements

are well in place in Australia, the apparent failure of CG not being able to

constrain misconduct in banks remains a puzzle. We question whether

Anglo-Saxon model of short-termism has permeated bank organization cul-

ture beyond fixation. We suggest various opportunities for further research

to try to narrow the gap between governance deficit and conduct in the

banking sector.

KEYWORDS

Anglo-Saxon model, Australia, bank governance, BCBS, corporate culture, corporate governance

1|INTRODUCTION

Australia has been relatively stable and occasionally

described as not having recession for several years in a

row with continuous growth. However, the recent

Royal Commission in banking point toward a leveling

off. The purpose of this commentary is to examine cor-

porate governance (CG) in the banking sector in

Australia in the context of the theory and practices

behind it. This is important given the ongoing debates

on CG captured in academic research, newspaper

headlines and various forums across Australia and

around the world. Major research headlines have

focused on whether CG constrains or impacts executive

behavior or organization performance. The recent find-

ings described as banking misconduct raises questions

how CG operates in Australia. Staples and Lin-

den (2019) citing the events of the Financial Services

Commission Royal Commission (FSRC) says that the

insights revealed have been shocking, with attention

not given to whistle blowers and no hard questions are

asked by directors in fulfilling their duties. From an

academic angle, the insights lead to questioning the

underpinning assumptions behind CG such as its abil-

ity to improve firm performance. We seek to under-

stand if bank governance improves overall bank

objectives in terms of performance, bank image and

standing in society. Furthermore, we seek to under-

stand if the findings of the Royal Commission suggest a

deficit in bank governance. We seek to discuss this

question by viewing banks as companies.

McConnell (2018) argues there is governance

deficit in Australia's largest banks and specifically

focuses on board composition (size and experience).

McConnel's view of board size compares with Renée

and Hamid (2003) who found that Bank Holding

Received: 15 August 2020 Accepted: 4 October 2020

DOI: 10.1002/jcaf.22475

J Corp Acct Fin. 2020;1–6. wileyonlinelibrary.com/journal/jcaf © 2020 Wiley Periodicals LLC 1