This study investigates corporate governance (CG) from inside the boardroom and sheds new light on the phenomenon from the perspective of board directors serving publicly listed corporations (plc) in Australia. How our corporations are governed and the question of what board directors do has become increasingly important. Recent cases of corporate malfeasance and collapse have highlighted the significance of CG to our economic and social well-being and have precipitated calls from multiple sectors of the community for improved CG.
Over several decades, academic researchers from a variety of disciplines have studied the practice often producing conflicting theories -most of which offer prescriptions for “Best Practice”. Although a plethora of work exists, three theories dominate the literature - agency, stewardship, and resource-dependence theories. While the studies offer valuable insights, each views the phenomenon through a uni-dimensional lens, positing links between certain board attributes and various measures of corporate financial performance.
This thesis asserts that for the field to develop a better understanding of CG, we must first look at what its practitioners do. When we know more about what board directors do, we can say more about what effective CG is and how it can be attained. Consequently, this study contributes to the present CG research agenda by adopting an alternative approach and investigates CG from the directors’ perspectives.
Situated within an interpretive paradigm and using a phenomenographic approach, this study systematically explored the variation in what board directors understood CG to be and how these understandings formed the basis for accomplishing their work. Thus, the board directors’ lived experiences of CG provided the point of departure for this research.
The phenomenographic design implemented, encompassed 60-hours of interviews and 200-hours of observation of board meetings and informal gatherings, with 23 directors serving 57 plc headquartered in Australia. The findings suggest that although directors identify the same core activities as fundamental to the practice, they differ in their understanding of the purpose, meaning, and substance of these activities, which forms the basis for the way in which they actually practised CG.
Four qualitatively different understandings of CG have been identified in this study: 1) Company Figureheads -understand CG from a sanctioning orientation; 2) Company Protectors - understand CG from a protectionist orientation; 3) Company Captains - understand CG from a guiding orientation; and 4) Company Developers -understand CG from a developmental orientation. Within this outcome range of understandings, a varying breadth and depth of comprehension was present, which was hierarchically related.
The findings demonstrate that rather than CG being constituted by a static set of attributes as current theories depict, CG is instead constituted by board directors’ understanding of CG. Implicitly therefore, how a director practises CG, varies according to how they understand CG.
This thesis presents the first phenomenographic study of CG, and provides a new and alternative framework for understanding and investigating what defines the practice of CG. Such a framework presents significant implications for theory, the practice of CG and its future.