8. Maximising the ‘Default Standard’ of Shareholder Value

Francesco de Zwart, Enhancing Firm Sustainability Through Governance, The Relational Corporate Governance Approach, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, Corporations, Globalisation and the Law Series, July 2015, (‘Stage 1’).

For Stage 1, see also, Francesco de Zwart, “Enhancing firm sustainability through governance – Part 1: The challenge of corporate governance” (2018) 33(2) Aust Jnl of Corp Law 144 and Francesco de Zwart, “Enhancing firm sustainability through governance – Part 2: The framework of the relational corporate governance approach” (2019) 34(1) Aust Jnl of Corp Law 27.

Frank H Easterbrook and Daniel R Fischel, “The Corporate Contract” (1989) 89 Colum L Rev 1416, 1430–1 and Lawrence A Cunningham, “Behavioral Finance and Investor Governance” (2002) 59 Washington & Lee Law Review 767, accessed 14 April 2017 at SSRN: http://​ssrn.​com/​abstract=​255778, 3. The author cites Donald C Langevoort, “Theories, Assumptions and Securities Regulation: Market Efficiency Revisited” (1992) 140 U Pa L Rev 85. See also, Eugene F Fama, Michael C Jensen, Lawrence Fisher and Richard Roll, “The Adjustment of Stock Prices to New Information” (1969) 10 International Economic Review 1–22, accessed 14 April 2017 at SSRN: http://​ssrn.​com/​abstract=​321524

Klaus J Hopt, “Corporate Governance of Banks and Other Financial Institutions After the Financial Crisis”, (2013) 13(2) Journal of Corporate Law Studies 219–253 (Part B); “Corporate Governance of Banks after the Financial Crisis”, in E Wymeersch, K J Hopt and G Ferrarini, eds., Financial Regulation and Supervision, A post-crisis analysis, Oxford University Press 2012, pp. 337–367 (Part A); ECGI – Law Working Paper No. 207. (1 April 2013), accessed 13 April 2017 at SSRN: http://​ssrn.​com/​abstract=​2212198, 9 (footnotes omitted).

V Bruno and Stijn Claessens, “Corporate Governance and Regulation: Can There Be Too Much of a Good Thing?” (March 1, 2007), World Bank Policy Research Working Paper No 4140, accessed 14 April 2017 at SSRN: http://​ssrn.​com/​abstract=​964802, 4.

Gerard J Charreaux, “Corporate Governance Theories: From Micro Theories to National Systems Theories” (January 2004), Universite de Bourgogne Fargo Working Paper No. 1040101, accessed 14 April 2017 at SSRN: http://​ssrn.​com/​abstract=​486522, 8 and Amir N Licht, “The Maximands of Corporate Governance: A Theory of Values and Cognitive Style” (November 2003), ECGI – Law Working Paper No. 16/2003, accessed 14 April 201 at SSRN: http://​ssrn.​com/​abstract=​469801 and (2004) 29(3) Delaware Journal of Corporate Law 649–746, accessed 14 April 2017 at SSRN: http://​ssrn.​com/​abstract=​764025, 4.

Frank Jan De Graaf and Cynthia A Williams, The intellectual foundations of the global financial crisis (2009) 32(2) UNSWLJ 390–415, accessed 8 April 2017 at http://​www.​unswlawjournal.​unsw.​edu.​au/​sites/​default/​files/​27_​jan_​de_​graaf_​2009.​pdf

Ibid, 403 (footnote omitted). The authors cite Michael C Jensen and William H Meckling, ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ (1976) 3(4) Journal of Financial Economics 305 and Eugene F Fama, ‘Agency Problems and the Theory of the Firm’ (1980) 88 Journal of Political Economics 288.

De Graaf and Williams, above n 7, 404 (footnote omitted). The authors cite Eugene Fama, ‘The Disciplining of Corporate Managers’ (Selected Paper No 56, Graduate School of Business University of Chicago, 1980), 4.

Ibid, 404.

John Armour and Jeffrey N Gordon, “Systemic Harms and Shareholder Value” (2014) 6(1) The Journal of Legal Analysis 35; ECGI – Law Working Paper No. 222; Columbia Law and Economics Working Paper No. 452, (11 July 2014), accessed 11 May 2017 at SSRN: http://​ssrn.​com/​abstract=​2307959, 38–39.

Ibid.

Ibid.

Ibid, 39–40.

Ibid, 64.

Being PART IIAA – THE BANKING EXECUTIVE ACCOUNTABILITY REGIME, Banking Act 1959 (Cth), ss 37 – 37KC accessed 28 February 2019, available at http://​classic.​austlii.​edu.​au/​au/​legis/​cth/​consol_​act/​ba195972/​index.​html#s37g, (the ‘BEAR’). The Australian Treasury announced in a Proposals Paper of 22 January 2020 that it proposed to extend the BEAR to other APRA regulated entities in the insurance and superannuation industries with the introduction of the Financial Accountability Regime (FAR). See Australian Government, The Treasury, Proposal Paper, Implementing Royal Commission Recommendations 3.9, 4.12, 6.6, 6.7 and 6.8 Financial Accountability Regime, accessed 17 February 2020, available at https://​treasury.​gov.​au/​sites/​default/​files/​2020-01/​c2020-24974.​pdf. See Attachment A – Summary of changes from the BEAR to the FAR, pp. 11–13. The Government intends to introduce legislation by the end of 2020 to implement the FAR. See Proposal Paper, Next steps, p 3. Accountability Statements and Accountability Maps will remain obligations of the FAR. See Proposal Paper, Accountability maps and statements, p 7 and Attachment A, p 12.

Ibid, sections 37C and 37CA.

Nicholas Calcina Howson, “When ‘Good’ Corporate Governance Makes ‘Bad’ (Financial) Firms: The Global Crisis and the Limits of Private Law” (2009) 108 Michigan Law Review, First Impressions 44; University of Michigan Law & Economics, Olin Working Paper No. 09–024, (17 November 2009), accessed 14 April 2017 at SSRN: http://​ssrn.​com/​abstract=​1511904, 48 (emphasis in original).

Ibid.

Lutgart A A Van Den Berghe, “To What Extent is the Financial Crisis a Governance Crisis? From Diagnosis to Possible Remedies”, (May 27, 2009), accessed 4 April 2017 at SSRN: http://​ssrn.​com/​abstract=​1410455, 9.

Ibid.