Corporate governance and dividend strategy: lessons from Australia

Corporate governance in Australia has become important according to both academic and managerial perspectives. The governance system is a dynamic force which has been evolving continuously. A series of corporate collapses and the recent global financial crisis have encouraged most countries including Australia to develop their governance systems, and policy makers to develop a code for the role of governance (Aguilera & Cuervo-Cazurra, 2009; Beekes et al., 2011). The common law system for corporate governance in Australia is similar to the Anglo-Saxon so-called “outsider” system of ownership and control, which is typical of the board structure in the United Kingdom (UK) and the United States (Dignam & Galanis, 2004). This governance mechanism is a framework of rules, practices, systems, and relations by which a company and its authorities and managers are controlled and directed. This involves balancing the interests of insiders (managers) and outsiders (such as customers, shareholders, financiers, and government). Therefore, the structure of this governance can influence the way the objectives of a company are set and achieved, the way that performance is optimized, and how risks are monitored and assessed.