Michelle Anne Welsh

The Evolution of Shareholder and Creditor Protection in Australia: An International Comparison

This article is part of a larger international investigation of the effects of a countrys legal origins on the style of business regulation. We employ an innovative ‘leximetric’ methodology to numerically code the protective strength of Australian corporate law for both shareholder and creditor protection for the period 1970 to 2010. This leximetric methodology has been used in a prominent international debate concerning the development of legal rules and the effects of different styles of regulation on a range of economic outcomes—the legal origins debate. Drawing on similar data compiled by Armour, Deakin, Lele and Siems in five other countries (France, Germany, India, the UK and the US) for the period 1970 to 2005, we compare changes in the level of protection afforded to Australian shareholders and creditors with developments in other countries. Our analysis finds that in Australia there was a sustained upward trend in shareholder protection, but not in the case of creditor protection. Compared to the five other countries, the level of protection afforded to shareholders under Australian law was relatively high, and this was the case for the level of protection afforded to creditors as well. We also examine the extent of convergence and divergence in shareholder and creditor protection among the countries in the study. We find persistent divergence in shareholder protection, with the extent of divergence in 2005 similar to that in 1970. For creditor protection, we find increasing divergence among the countries over the period of study. Our findings are not supportive of legal origins theory.

Whistleblowing, Ethics and Corporate Culture: Theory and Practice in Australia

Recent instability in the global financial markets has highlighted the need for companies to remain vigilant in detecting fraud and other forms of misconduct. Encouraging whistleblowing by persons who have knowledge of corporate misconduct or fraud is important. Legislative provisions protecting whistleblowers and the integration of whistleblower programmes within a companys corporate governance framework are two strategies that may encourage whistleblowing. Legislative provisions protecting whistleblowers were introduced into the Australian Corporations Act 2001 (Cth) in 2004. In 2007 the revised Australian Stock Exchange Principles recommended that listed corporations establish a code of conduct, and suggested that the code imbed within it reference to the way in which whistleblower disclosures are handled. While there have been various studies investigating whistleblowing programmes in the public sector, prior to this study there was virtually no empirical research into corporate sector whistleblowing in Australia. This paper examines the findings of an empirical study into the use of the whistleblowing protection provisions contained in the Australian Corporations Act 2001 (Cth) and the adoption of whistleblowing programmes as recommended by the Australian Stock Exchange Principles by Australias leading 200 listed companies.

Worker and Shareholder Protection in Six Countries: A Longitudinal Analysis

In this paper the authors utilise leximetric analysis, which involves the numerical coding of the strength of formal legal protections, to document changes in the level of worker protection and shareholder protection in six countries (Australia, France, Germany, India, the United Kingdom and the United States) for the period 1970-2005. Both worker and shareholder protection increased in five of the six countries and in the sixth country (Australia) shareholder protection increased and the level of worker protection in 2005 was similar to the level of protection in 1970. The results of statistical tests show that increased formal legal protection for shareholders is not obtained at the expense of formal protection for workers. Implications of this finding are explored by the authors.

Public V Private Enforcement of Securities Laws: An Australian Empirical Study

Class actions on behalf of aggrieved shareholders and other investors have become the most common form of group litigation filed in the Federal Court of Australia. This increasing importance of investor class actions has raised a number of important practical and conceptual issues. One such issue is how this private enforcement of the laws that are intended to protect investors interacts with the operation of the public enforcement model and their respective abilities to deter illegal conduct and secure compensation for the losses suffered by investors. The aim of this article is to explore this issue by comparing and contrasting the enforcement actions that have been undertaken by the Australian Securities and Investments Commission, the public regulator, with the federal class actions that have been filed on behalf of investors with respect to the same conduct or legal disputes over a 17 year period. This empirical study focuses on the nature of the relief that was sought, the persons and entities against whom this relief was sought and/or secured, the outcomes of these actions and the problems that may be encountered when the same conduct prompts public and private enforcement activity.

New Sanctions and Increased Enforcement Activity in Australian Corporate Law: Impact and Implications

This paper is concerned with calculated motivations for compliance and in particular the deterrent effect of the introduction of new sanctions and/or the use of those sanctions by a regulator. It is concerned with normative and social motivations for compliance and examines the impact of the introduction and use of new sanctions on the perceptions and behaviour of corporate compliance officers. These questions are addressed in the context of the continuous disclosure requirements imposed on Australian listed corporations.