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The paradox of transparency : short-termism and the institutionalisation of Australian capital markets

Nicholson, Gavin J. & Cook, Zoie (2009) The paradox of transparency : short-termism and the institutionalisation of Australian capital markets. Australian Accounting Review, 19(4), pp. 303-313.

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Abstract

As the ultimate corporate decision-makers, directors have an impact on the investment time horizons of the corporations they govern. How they make investment decisions has been profoundly influenced by the expansion of the investment chain and the increasing concentration of share ownership in institutional hands. By examining agency in light of legal theory, we highlight that the board is in fact sui generis and not an agent of shareholders. Consequently, transparency can lead to directors being 'captured' by institutional investor objectives and timeframes, potentially to the detriment of the corporation as a whole. The counter-intuitive conclusion is that transparency may, under certain conditions, undermine good corporate governance and lead to excessive short-termism.

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ID Code: 30336
Item Type: Journal Article
Keywords: corporate governance, agency, firm, ownership, performance, management, decades
DOI: 10.1111/j.1835-2561.2009.00066.x
ISSN: 1035-6908
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100) > Accounting Auditing and Accountability not elsewhere classified (150199)
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300) > Corporate Governance and Stakeholder Engagement (150303)
Divisions: Current > Research Centres > Australian Centre for Philanthropy and Nonprofit Studies
Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Funding:
  • ARC DISCOVERY GRANT/DP0773733
Copyright Owner: Copyright 2009 CPA Australia Ltd (CPA Australia).
Deposited On: 10 Feb 2010 16:48
Last Modified: 20 Jun 2014 12:28

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