A governance Frankenstein integrating the agency and institutional perspectives: focusing on audit committees

Lary, A 2014, A governance Frankenstein integrating the agency and institutional perspectives: focusing on audit committees, Doctor of Philosophy (PhD), Accounting, RMIT University.


Document type: Thesis
Collection: Theses

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Title A governance Frankenstein integrating the agency and institutional perspectives: focusing on audit committees
Author(s) Lary, A
Year 2014
Abstract This thesis focuses on the relationships between corporate governance structures and the interactions between corporate governance actors. It places the audit committee at its central focus point, but within a holistic corporate eco-system.

To develop a more rounded understanding of corporate governance phenomena, the relationships between governance structures and the interactions between governance actors are framed through the lenses of both agency theory and institutional theory. In particular, the different sets of assumptions underlying these two grand theories are assessed against the evidence of audit committees’ structures, policies and actor behaviours within their wider corporate eco-systems. Case-based methods are used to gather the evidence for this thesis and qualitative analysis is applied. Corporate governance phenomena associated with a large corporation and four local government entities in Australia is obtained. A three stage coding scheme and a two-step analysis approach is adopted.

To reiterate, this thesis addresses the way in which governance actors and their structures interact as part of an organisation’s holistic corporate eco-system. A pluralistic approach to perceiving and interpreting this phenomenon is taken by combining both agency and institutional theoretical perspectives. It is the assumptions about organisational structures and key players’ behaviours on which these two theories are founded that are especially assessed in this thesis. Therefore, while agency theory and institutional theory have spawned their own sub-branches and sub-theories, these two theories are only addressed in this thesis at their broad level where their original assumptions have been formulated.

The findings of this thesis suggest that the classical agency perspective of western-derived corporate governance can be better explained adopting a mixed theoretical framework which draws on both agency theory and institutional theory. In particular, agency theory better explains the purpose and function of corporate governance and its mechanisms, while institutional theory better explains its homogeneity and isomorphic change. Further, the thesis proposes an expanded governance model which incorporates both agency theory and institutional theory. This expanded governance model can be viewed as a theoretical Frankenstein which fits together an amalgam of assumed behaviours to better illustrate and more holistically capture the governance phenomena. Nonetheless, the model may also be disaggregated to explain the governance phenomenon applying either agency or institutional theory. Apart from this theory testing, the thesis provides insights into the descriptive governance workings of a large Australian listed company and also of Victorian local governments (i.e., city councils).

The expanded governance model proposed in this study has implications for corporate and public sector regulators, as well as an organisation’s independent directors. They should re-think any myopic agency theory perspective that uses solely agency-based policies for developing governance mechanisms. The evidence in this study infers that relevant regulators and directors need to design mechanisms that are structured to accommodate multilayers of homogeneous institutional groups. They also should orient policies towards achieving the desired effect on the legitimacy standards of the superordinate social system within which institutional groups interact under the expanded governance model.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Accounting
Keyword(s) corporate governance
agency theory
institutional theory
governance model
audit committee
local government
case study
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Created: Tue, 28 Nov 2017, 10:48:05 EST by Keely Chapman
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