Recurring cycle of Australian corporate reforms: a never ending story
Recent corporate reforms such as CLERP 9 (Australia) and Sarbanes-Oxley Act (USA) are typical of cyclic and reactive nature of corporate regulation. In the wake of recent corporate failures, there has been a public concern at the disparity between the healthy picture painted by the fmancial reports of some of these corporate failures' and the true state of these entities revealed by investigation after the collapse. It is obvious the regulatory J:eform structures are fundamentally weak in strategic areas, for example, the nature of legislation and accounting standards, enforcement and overall adnlinistration. The process of blame shifting and the rhetoric of attempting to prevent a reoccurrence of unexpected corporate failures such as One-Tel, Health International Holdings (HIH) in Australia and Enron in United States and Europe's Pannalat, inevitably ensures that'the regulatory failures and reform cycle will continue to be a "a never ending story". A Foucaldian framework based on the key concepts of power and knowledge of the regulators (governments) provides a lens through which to view this complicated regulatory issue. In other words, the underlying problems are not flaws inherent in the regulation or legislation but with a system that permits interested parties (professionals) to effectively control or thwart the regulatory process. This paper contends that the system of corporate regulation is not designed to be effectively enforced because, as the paper will demonstrate by reference to the history of corporate regulation in Australia, weaknesses are not adequately addressed or rectified. This paper recognises and takes as given that there is a recurring cycle of regulatory failure and regulatory reform. It also, accepts the arguments of a small number of authors that there are flaws within the regulatory mechanism which contribute to the perpetuation of the regulatory failure, regulatory reform cycle. However, this paper argues that these flaws are but a symptom of more deeply seated regulatory problems with on the run solutions.