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1. Article: Board Shake up at Troubled CBA Board members should only hold their positions for 2 x 3 year periods and then new board members should be appointed. Being on the board longer than that...

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1. Article: Board Shake up at Troubled CBA

Board members should only hold their positions for 2 x 3 year periods and then new board members should be appointed. Being on the board longer than that makes the board member complacent and subject to being co-opted by management.

Discuss. Use Agency theory and Stewardship Theory to support your answer. 10 marks

2. Article: No Women on the Board? Companies warned they could face Gender Quotas

The only way to improve board diversity is to impose quotas as has occurred in Norway.

Discuss. Use Resource Dependency theory and Stakeholder theory to support your arguments. 10 marks

3. Article: Unions, Superfunds’ Human Rights push

Superannuation (Pension) funds and activist groups including trade unions have the right and responsibility to pressure companies in regard to monitoring human rights in their supply chain and wage fraud as well as allowing shareholders to put forward resolutions at AGMs.

Discuss. Use Stakeholder theory and Stewardship theory to illustrate your answer.
10 marks


Answered Same Day Oct 18, 2019 IBU5GW La Trobe University


David answered on Dec 28 2019
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October 20,2017
Article 1:
Agency Theory is one that forms a summary that can solve problems arising from the relationship that occur between a principal and an agent. The agency theory defines the agency relationship that is common in financial management and is also a part of the nature of an industry. It is said that when one person manages the work of another person especially in terms of their financial affairs, an agency relationship exists between them. An agency relationship consists of two parties namely an agent who is also the decision maker and acts on behalf of another party namely the capital. Therefore, it is the owner of the organization, ie the shareholders who are the principal and the executives hired for performing the job role are the agents. Hence, the agency theory argues very well the fact the goal of both the principal and agent are different from each other and constitute a part of conflicting nature as well (Ingram, 2017). Agency theories focus on providing incentives and rewards to employees so that they achieve maximum profit out of it. It is said that boards under this approach are actively involved in managing the organization’s activities as well as manage decision making process that is accountable to the shareholders.
Stewardship theory is one such theory where the goals of both the principal the agent are similar and that managers are the stewards of the owners. Here too, the Board is keen in giving incentives by supporting the employees and not just behaving as a controlling power alone. Stewardship theory is thus one that argues about relationships maintained between board and executives that consists of training, mentoring and standard decision making. The article here discusses about how the appointment of one individual to the post of Board members at CBA can have an impact on various things that are interlinked to the company such as training, mentoring and even decision-making aspect (Bondigas, 2017). The idea of replacing one executive with another may or may not turn favourable for the company at all times. Here, Mr. Whitfield’s appointment to replace Mr. Ian Narev, chief executive of Commonwealth Bank of Australia has created a hustle which led the shares of the company to a low closing price of nearly $74.41. This low price has been noticed in the early days of September, 2017. Another fall in price was also noticed in August, 2017 due to anti-money laundering
each by CBA where prices had fallen down to nearly 11.4 percent. Another replacement of employees is being noticed wherein Ms Inman and Mr Young who had served the organizations for almost 10 years in different job position also saw that it is important to keep revolving employees and not let them serve in the same job position for longer period of time[footnoteRef:1]. Austrac created case on anti-money laundering too has shown us another side of how the shares of a company can be impacted due to damage being caused to the company. The investors also start having different prospects of investigations before even thinking of approaching the company to make future investments (, 2017). [1: ]
Independent directors today are seen as a critical effectiveness wherein corporate governance is also established as the co-opted director. Moreover, technically independent and co-opted directors too have interests that are more aligned with the CEO and even they are instrumental in selecting with that of the shareholders. Here, in the concerned article too there is an aspect shown where gender biasedness can also impact the effectiveness with which the co-option on board is effectively measured and that there are more frequent board meetings to decide upon small and nitty gritty things. It is said that the effectiveness with which the employees work in organization is one that can measure their work quality, sincerity towards the job and their loyalty towards management, etc (E. Wilson, Jr., 2017). When Ms.Inman and Mr. Young were serving beyond their respective job tenure, it is then itself that they should have been asked to complete their job...

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