ACC30008: ACCOUNTING THEORY Assessment 2: Research Assignment Executive Summary: The fourth edition of the ASX Corporate Governance principles and recommendations was released in 2019 and implemented on the 1st of January 2020. The structure of the fourth edition is similar to the third in which it focuses on encompassing the eight core principles and their recommendations. "The key changes that are reflected in the fourth edition of the ASX Corporate Governance principles and recommendations is a recognition of the importance of monitoring and taking responsibility for culture, conduct and behavior within the corporate group" (Lorenzi, 2019). The changes made in the fourth edition address issues of governance that originate from misconduct and culture. A literature review was undertaken with a focus on the impact of board characteristics with the performance of the company. The literature review indicates how board characteristics such as board gender, board size and board composition affect the performance of listed companies. The analysis was completed on a sample of 15 publicly listed companies within the ASX with a focus on the board gender, size and composition. The study found that there was a positive contribution between the board gender and the performance of the company but found that there was negative relation between the board size and board composition when associating the characteristic with the performance of the listed company. A recommendation was given to the CEO in agreeance with the fourth edition of the ASX Corporate Governance principles and recommendations as it would promote a unified culture and a good reputation for the business. Introduction: This report will aim to understand the changes between the third and fourth edition of the ASX Corporate Governance principles and recommendations with regards to the roles and responsibilities of the board of directors. The report will also look at previous studies and literature reviews that focused on whether or not board characteristics had any effect on the performance of listed companies. A sample size was observed for this study and a regression analysis was performed to better grasp the impacts of board characteristics. The results of this study would be of significant interest to the shareholders, boards and regulators as it highlights the board characteristics that should be targeted if an improvement of corporate governance was what they wanted to achieve. A recommendation was also made for the CEO with regards to complying with the changes implemented in the fourth edition of the ASX Corporate Governance recommendations. 4 Discussion and Analysis: Corporate Governance
Numerous changes were made to the ASX Corporate Governance principles and recommendations when the fourth edition was released in 2019. Changes can be seen as early as the first principle, noticeably in the sections 1.1, 1.2, 1.3 and 1.5. The board of directors should demonstrate leadership and align themselves with the purpose of the entity (ASX Corporate Governance Council, 2019). Also, the board of directors should update their recruitment practices by performing thorough background checks. Directors must have proper written agreements indicating the terms of appointment