Monash Business Review
The US sub-prime credit crisis has turned toxic, infecting policymakers, corporations and investors worldwide. Fresh challenges abound for all these stakeholders.
While the government policy response to date has been to protect bank deposits and inject liquidity into the financial system to stave off recession, major challenges for the corporate sector include maintaining value through sound corporate governance practices and retaining and recruiting an appropriate skilled labour force in a time of tighter budget constraints.
As such, this issue of Monash Business Review provides a timely focus on corporate governance and skills shortage issues in the Australian context.
However, it is not just in Australia that questions are being asked about what constitutes good corporate governance. Businesses worldwide are struggling with these same regulation issues.
While global corporations collapse around them, Emilio Botín, chairman of Banco Santander, the largest bank in the euro zone by market capitalisation, has gone on a buying spree of US and UK failing banks. At a recent international banking conference he spoke of the lessons we might learn from this financial crisis. One of them was the need for “stronger corporate governance”.
He said: “We must avoid generating moral hazard: we cannot transmit the message that it is possible to act without assuming responsibility for your errors ... We must also encourage transparency.”
In a world where discretionary cash flows are tight, the need for an even greater focus on corporate governance is pressing as is the need for government to have the correct policy settings around these matters.
The papers in this issue were finalised before the ‘Seismic September’ and ‘Awful October’ global market seizure. However, these recent events have made the focus of the papers even timelier in addressing the challenges of our time.
The set of papers in this issue provide a great discussion in which to frame the consideration of these matters.
Professor Robert Brooks
Department of Economics and Business Statistics, Monash University