CFOs divided on corporate governance
Opinion is divided as to whether corporate governance hinders entrepreneurial activity, a survey of 250 chief financial officers (CFOs) of listed companies in Australasia revealed.
The survey by the Institute of Chartered Accountants in Australia surveyed CFOs from Australia, Singapore, Hong Kong and Malaysia, who had polarised views when asked if corporate governance inhibited their entrepreneurial activity. Some 38 per cent disagreed that greater emphasis on corporate governance reduced their entrepreneurial activity, while only 35 per cent agreed that it did inhibit entrepreneurial activities. A further 27 per cent were reluctant to agree or disagree.
The Institute’s executive general manager, Lee White, said the results suggested that some of the comments from directors and other business people about increased governance requirements hindering their risk-taking may be overstated.
“It may also indicate that as a result of the global financial crisis there is greater recognition by CFOs of the fact that good risk management contributes to, rather than detracts from, effective risk taking,” he said.
The survey also revealed that corporate social responsibility (CSR) was not a priority in the region, with 65 per cent of respondents not reporting on environmental sustainability and other CSR issues because it was not mandatory. Some 34 per cent stated it was not relevant and 54 per cent that did not report on CSR issues did not intend do so in the next year.
“When it comes to CSR reporting, there is still a long way to go in changing the mind-set of companies,” said White. “CFOs can’t ignore the fact stakeholders are becoming increasingly aware and concerned about environmental and social impacts. It’s just a matter of time before stakeholders make companies more accountable.”
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