Corporate Governance and M&A in Australia: An Overview for Assessing Japan and the 'Americanisation' Thesis

Abstract

This paper sketches a roadmap of key features and directions in Australian corporate governance, generally (Part 1) and specifically regarding takeovers law and practice (Part 2). In particular, it introduces highlights from a growing corpus of empirical studies, and identifies points that may be of special interest to those familiar with major changes or debates underway in many parts of the Asia-Pacific, particularly in Japan. Part 1.A begins with the insight that Australia may not be so Anglo-American after all, because traditionally it has more blockholders (concentrated shareholdings) and less active institutional investors. This may help explain still limited changes to law and/or practice regarding derivative shareholder suits, as well as more arm's-length market-based monitoring mechanisms such as disclosure, independent directors, and executive remuneration packages (Part 1.B). On the other hand, Australia is experiencing a new boom in M&A (Part 2.A), and its levels of hostile takeovers and success rates even in the 1990s appear close to those in the UK (2.B), although success rates in both countries are much higher than the US. This arm's-length control mechanism may have become more prevalent due to broader economic changes, such as liberalisation of financial markets to allow easier financing of takeovers. But another factor seems to have been the historical legacy of following the law in England, despite the latter's less concentrated shareholding patterns (2.C). The environment is likely to have become even more conducive to hostile takeovers from 2000, when disputes were largely diverted from the courts to a full-scale Takeovers Panel (2.D), similar to that introduced along with the UK City Code on Takeovers in 1968. However, Australia's version is somewhat more formalised, and was recently challenged for unconstitutionally usurping judicial power. Overall (Part 3), this analysis suggests a more complex picture of corporate governance transformations. They do not necessarily pull all in the same direction (as the takeovers market shows), and there remain some important differences from developments in the UK and especially the US.