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

Date01 January 2021
AuthorErick Rading Outa,Shawgat Kutubi
Published date01 January 2021
J Corp Acct Fin. 2021;32:145–150. © 2020 Wiley Periodicals, Inc. 145
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,
Erick Rading Outa, Asia Pacific College of
Business and Law, Charles Darwin
University, Darwin, Australia.
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.
Anglo-Saxon model, Australia, bank governance, BCBS, corporate culture, corporate governance
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;16. © 2020 Wiley Periodicals LLC 1

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