Therefore, studying both countries' corporate governance is necessary in order for other developing countries to learn from their experiences. Similarities and Differences of U.S. And Australia's Corporate Governance and Responsibility

Global trends in the corporate governance made the countries more or less similar when it comes to their responsibilities concerning the issue. Not only in the implementations did these countries have become similar, but even with the different issues involving controversies and failures connected to corporate governance as well.

These failures have further stimulated the debate about corporate governance, leading to regulatory action and other reforms. One of the most significant cases in corporate governance failures were those of the United States' Enron, Worldcom and Tyco that later initiated the major debate and legislation in the country. Australia has its own significant issue that of the HIH, an insurance company that collapsed in 2001 with debts of about $5.3billion (Saville, 2003). There were also other businesses that had collapse such as the Ansett Airlines and One Tel in Australia. http://www.oecd.org/LongAbstract/0,2546,en_2649_37439_21755679_1_1_1_37439,00.html, para 17)

As both countries had been practicing the common-laws, United States and Australia are more "shareholder-focused" in their governance and accounting standards, in contrast to the code-law countries of Japan, Germany, and France which represent bank-dominated economies and are more "stakeholder focused." (Holcomb, 2004)

Australia's system of corporate governance is usually said to be similar to those of the United Kingdom and the United States in terms of ownership and control. Dispersed shareholdings where shareholders and companies interact on an arm's-length basis, largely determined by market forces characterizes its securities market. This is the reason why corporate governance system in Australia is referred to as an "outsider" systems wherein its shareholders are more dispersed and are indirectly involved in the control of companies. (Dignam & Galanis, 2005)

Moreover, this idea of the Australian corporate governance is somehow proven to be true since many of the key institutions present in countries with outsider systems are as well present in Australia. A securities market, a securities regulator, a takeovers panel, a disclosure regime and outsider corporate governance codes evolve around the Australian corporate governance system. (Dignam & Galanis, 2005)

Australian Stock Exchange (ASX) had become an essential matrix for the country regarding legislation, accounting standards which have the force of law, ASX Listing Rules, and voluntary self-regulatory codes of practice. (www.treasury.gov.au/documents/178/RTF/ch4.rtf)

The Corporations Law are addressed with the basic rights of shareholders and duties of directors are contained both in legislation and in the common law, as well as financial reporting requirements in accounting standards, and in the ASX Listing Rules. Self-regulatory codes of practice also cover aspects of the internal management of companies such as the structure and make up of boards. http://www.treasury.gov.au/documents/178/RTF/ch4.rtf, para 4)

The Australian Securities and Investments Commission (ASIC) oversees this matrix with wide ranging enforcement powers. ASIC undertakes a range of activities in order to facilitate improved corporate governance. In addition to enforcing relevant provisions of the Corporations Law, ASIC sets standards, issues best practice guides, and has a key role in disseminating information to the market together with the ASX. (www.treasury.gov.au/documents/178/RTF/ch4.rtf)

There is at the same time a wide range of disclosure requirements on listed companies wherein disciplinary actions may be taken by the ASX against companies in breach of its Listing Rules. These actions may include suspension of an entity's securities from quotation or, ultimately, delisting. The ASX also requires each listed company to disclose the main corporate governance practices it has had in place during the year. Under this rule, the ASX does not require that particular practices be adopted or that companies report against prescribed checklists. Rather, it aims to promote disclosure of the corporate governance practices a particular company already has in place. (www.treasury.gov.au/documents/178/RTF/ch4.rtf)

Being a member of the Organization for Economic Co-operation and Development (OECD), Australia adheres to its draft Principles, although its general nature does not lend itself to a clear cut 'checklist' assessment. Australia meets, and in some cases exceeds, international accounting and auditing standards. Disclosure of matters not covered by accounting and auditing standards are met through legislative requirements or Stock Exchange Listing Rules backed by enforcement mechanisms, or in some cases through the encouragement of best practice. http://www.treasury.gov.au/documents/178/RTF/ch4.rtf,...

By way of comparison, many large, successful U.S. multinationals have vested much greater power in the chairman/CEO and senior management, and often have as few as four to six meetings a year. (Wallis, 2000)
The legal component of corporate governance covers directors' duties, shareholder remedies and meetings. There is a debate whether it covers other law which imposes liability on directors. Systems of self-regulation range from what could be called hard/soft law like stock exchange listing rules and statements of accounting practice, to institutional codes such as the ASX Principles of Good Corporate Governance and Best Practice Recommendations to the codes of individual companies. Sometimes corporate governance is thought to cover business ethics. The form of self-regulation tends to be analyzed in terms of rules vs. principles, but to these we can add the norms of best practice. (Farrar, 2005)

The United States' corporate governance however regards corporate law as but one small part of a complex U.S. corporate governance system comprising a wide array of complementary institutions, incentive structures, constraints, and practices that work together to create a whole that is greater than the sum of its parts. (Paredes, 2004)

The complex governance system of the United States requires the country to put the importance on shareholder performance while catching up with the managerial action in a strong legal and regulatory framework designed to ensure legitimacy and prevent conspiracy. The emphasis of the corporate governance in the United States is towards the protection of its shareholder rights and maximization of shareholder return, and meeting the metrics imposed by an active, liquid, and deep capital market. (Detomasi, 2002)

One could postulate that in relation to corporate performance, the Walmart board, who meet only four times a year, would be in an inferior position to the boards of David Jones and Coles Myer, who meet close to monthly throughout the year in Australia. However, the results show that the Walmart board has delivered outstanding results for its shareholders no matter. (Wallis, 2000)

Around 80 per cent of U.S. companies combine the (chairman and CEO) role, while that of the European countries including Australia, its advisers and others with relationships to the company are valued as directors.. (Wallis, 2000)

The U.S. corporate governance system also relies on directors and officers "to do the right thing" by voluntarily taking steps to maximize firm value even when nobody is watching and there is little if any risk of market or legal sanction. Norms have received a great deal of recent attention as an important extralegal governance device.. (Paredes, 2004)

Consequently, relying too much on the directors may develop a negative effect on the system's governance. Given such very strong authority, officers and directors are challenged to control agency costs. Therefore, whenever the interests of directors and officers conflict with the best interests of the corporation and its shareholders, the concern is that management will tend to act in its own self-interest. For example, managers might decide to avoid, pay themselves excessive compensation packages, have fancy corporate jets and other perks, or build an empire by acquiring companies, all to the detriment of the company and shareholder value. (Paredes, 2004)

The United States corporate law, though a state law, the mandatory disclosure regime of the federal securities laws makes possible the market-based corporate governance system of the United States. Mandatory disclosure, backed by stringent antifraud provisions, plays a critical role in U.S. corporate governance by ensuring that investors, with the assistance of the supporting institutions described above, have adequate information to exercise their rights to vote, sell, and sue. The ability to exercise these rights allows investors to protect their interests without the need for more substantive regulation of internal corporate affairs at either the state or federal level. (Paredes, 2004)

On the other hand, the role of the directors in the corporations does not mean anything as such the shareholders do not have any "positive" control rights over the corporation granting them direct input into and say over how the corporation is governed or whether certain business opportunities are pursued. Shareholders are still given the right to vote for the board of directors, most importantly, and can make recommendations on governance and business matters to the board through the shareholder proposal process. They also have the right to vote on certain mergers and on any proposed sale of all or substantially all of…