Australian companies are still falling down on their corporate governance policies, according to a new report by WHK Horwath.
The survey, based on large and mid-cap governance reports, found less than 16 per cent of the largest 250 Australian companies by market capitalisation were achieving best practice in the area.
The result was even more disappointing in the mid-cap sector, with less than 5 per cent reporting best practice governance standards.
WHK Horwath principal audit and assurance John Gavens said the results of the survey were disappointing.
“The results are very disappointing and show there has actually been a deterioration in the corporate governance across both the large cap and mid-cap sectors,” he said.
“We have the corporate governance framework and guidelines in place and should expect, from an accountability and performance perspective, companies should be complying, particularly at the larger end of the market.”
In the large cap sector, 14 listed companies achieved the lowest possible score of one star for corporate governance, on a scale of one to five stars.
This compared with 10 companies in 2008.
In the mid-cap sector, which includes 150 companies, the number with only one-star ratings more than doubled compared to the previous year.
A total of 23 companies ranked as the worst governance performers, up from 10 companies in 2008.
While some companies with poor corporate governance have disappeared from the marketplace, which Gavens said was good, their replacements are even worse.
“During the last 12 months, we have seen companies with poor corporate governance practices disappear from the survey and be replaced with companies with even poorer corporate governance practices,” he said.
“The uncertain economic times have resulted in the survey reviewing the practices of companies that would otherwise fly under the radar.
“What is unclear is whether this is a short term aberration as these companies may disappear from the mid-cap list as quickly as they have appeared.”
The research for the WHK survey was undertaken by the University of Newcastle.
