ASIC Actions: Canaries for Poor Corporate Governance?

Posted: 4 Jul 2008 Last revised: 16 May 2014

See all articles by Jennifer Filippetto

Jennifer Filippetto

The University of Western Australia

Raymond da Silva Rosa

The University of Western Australia - Department of Accounting and Finance; Financial Research Network (FIRN)

Ann Tarca

University of Western Australia

Date Written: July 4, 2008

Abstract

This study investigates whether companies subject to an ASIC action have poorer corporate governance than other companies. We consider a matched sample of 240 companies, including 120 which were subject to 143 actions relating to (a) interpretation of accounting standards, (b) the continuous disclosure regime and (c) other governance matters during the period 1998-2004. We find that companies subject to ASIC actions are less likely to comply with the ASX best practice governance recommendations and that the main area of difference relates to separation of the roles of the CEO and board chair. The results suggest that, in relation to publicised cases, ASIC is effective in targeting more poorly governed companies, a positive signal for Australian capital markets.

Keywords: corporate governance, accounting standards, enforcement, Australian Securities and Investment Commission

JEL Classification: G15, G34, G38, M41, K22

Suggested Citation

Filippetto, Jennifer and da Silva Rosa, Raymond and Tarca, Ann, ASIC Actions: Canaries for Poor Corporate Governance? (July 4, 2008). Available at SSRN: https://ssrn.com/abstract=1155395

Jennifer Filippetto

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

Raymond Da Silva Rosa

The University of Western Australia - Department of Accounting and Finance ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Ann Tarca (Contact Author)

University of Western Australia ( email )

Business School
35 Stirling Highway
Crawley WA 6009
Australia
+61 8 6488 3868 (Phone)
+61 8 6488 1047 (Fax)

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