As touched upon in Chapter 1, contemporary commentary on corporate governance can be divided into two main approaches: stakeholder primacy, and the narrower shareholder primacy. This chapter focuses on the first of these objectives. We commence the chapter by pointing out that an approach that accentuates the differences between a shareholder versus a stakeholder theory of the corporation is probably a contradiction and a false dichotomy. We then deal with the important aspect of corporate social responsibility (‘CSR’) and the related issue of disclosure of and reporting on non-financial matters. As part of this discussion we focus on the controversial and highly topical issue of companies exaggerating their image as environmentally friendly corporations (greenwashing) to please investors and to attract more investments, as well as smartening their image on other issues (greenscreening). This chapter then looks at the ‘social licence to operate’ before shifting to CSR and directors’ duties. The chapter concludes by considering the meaning of ‘stakeholders’ and how all corporate stakeholders have vested interests in the sustainability of corporations.

This chapter opens with a brief discussion of the nature of business ethics, its significance for corporations and the ethical dimensions of a corporation’s stakeholder relationships. The next section is focused on the causes of ethical problems: bad apples, bad cases and bad barrels. In order to examine these it presents the theory related to each before drawing on three case studies: the HIH failure, the LIBOR case and the destruction of Juukan Gorge. The extent to which we attempt to encourage ethical conduct is discussed in the following section. In particular, that section examines corporate accountability, individual accountability and organisation-level approaches that seek to shape the ethical conduct of corporations. The final section is devoted to some concluding remarks.

Since at least 2018 there has been a major shift within ‘Business America’ away from ‘shareholder capitalism’ towards ‘stakeholder capitalism’, a move which has already had some global impact. Our approach is, however, realistic and we also make the reader aware of the challenges for countries, particularly where shareholder primacy is deeply embedded in statutory law and case law, to move from shareholder primacy to an all-inclusive stakeholder model of corporate law and corporate governance. In this chapter we extract some of the ‘essential’ principles of corporate governance and illustrate that there is a ‘business case’ for good corporate governance. We conclude the chapter by discussing broader trends and debates with a present and likely future impact on corporate governance. These include what can be described as the ‘Fourth Industrial Revolution’; the widening gap between the ‘rich’ and the ‘poor’, or, put differently, ‘the price of inequality’; the growing problem regarding profit-sharing or capital distribution in large public corporations; and a short discussion of the so-called ‘Great Reset’.

Historically, the power to manage the business of all companies and corporations was conferred upon the board of directors. The fact that it was impossible for a board of directors to manage the day-to-day business of large public corporations was only openly acknowledged in the past three decades. This chapter focuses on the organs of a company and then discusses the main functions of a board of directors. It is clear that there is an important distinction between managing the business of the company and directing, supervising and overseeing the management of the business of corporations in large public companies. The board is responsible for directing, supervising and overseeing the management of the business of corporations. Managing the business of large public corporations is normally left to management, but under control of the board.

No matter which corporate code of conduct or corporate governance framework is used, the issue of ‘transparency’ is referred to, either directly or by implication. The application of ‘transparency’ to corporate reporting practices, covering both financial and non-financial conduct and performance, has come under increasing scrutiny from various stakeholder groups. The single most significant reform, to date, in this area in Australia came in response to the high-profile corporate collapses of the early 2000s. On 1 July 2004, the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) came into effect. This Act is commonly referred to as ‘CLERP 9’, as it was the ninth instalment under the government’s Corporate Law Economic Reform Program (‘CLERP’). CLERP 9 is broadly consistent with, and a complement to, the ASX Corporate Governance Principles and Recommendations, now in its fourth edition (2019). The aim was for the two documents together to promote good corporate governance practices within Australian listed companies and achieve effective regulation.

As a general rule, directors owe their duties to the company as a whole, not to individual shareholders. Historically, directors’ duties and liability were discussed under general law duties (duties at common law or in equity); subsequently, they were added to under statutory duties. Under general law duties, most courts and commentators usually draw a distinction between equitable duties based on loyalty and good faith, with a particular focus on fiduciary duties, and the duty to act with due care and diligence (the duty of care). The duty of care may arise under principles of equity and at common law, in both contract and tort. Fiduciary duties in Australian law are proscriptive, not prescriptive. That is, the duties prohibit the fiduciary from engaging in particular conduct rather than prescribing what the fiduciary must do in particular situations. The failure to act in a reasonable manner has traditionally fallen within the domain of the duty of care, whereas behavior which falls foul of principles of loyalty is addressed more clearly in equity.

In this chapter we establish the foundations for extracting principles of contemporary corporate governance. We begin the chapter by providing our own definition of the term ‘corporate governance’. The reason for this is to enable the reader to gain a good understanding of how we approach the principles of contemporary corporate governance in this book. We have adjusted the definition of corporate governance in each of the previous four editions, as well as in this edition. The reason is that corporate governance is a dynamic concept and we strive to keep the definition updated to reflect contemporary principles of corporate governance.

In the previous chapter we saw that modern community expectations require that all types of directors fulfil their duties of care and diligence meticulously. No longer may directors hide behind ignorance or inaction; nor are the duties of non-executive directors seen as being of an intermittent nature. All directors have a positive duty to challenge, inquire and investigate when controversial or potentially risky matters are discussed at board level. In this chapter we see that there are various types of company directors and officers, although the basic position is that the law will expect the same duties of all directors and that senior employees and senior executives owe duties to the company comparable to those of directors.

Australia has a long tradition of shareholder activism. What has changed in recent years is the nature of the shareholders who are taking activist positions. Institutional investors have always exercised some measure of influence over the management of large public corporations, but recent developments in shareholder activism have brought these manoeuvres into the public spotlight. Australia’s corporate landscape has featured a range of high-profile boardroom battles with activist investors. This chapter explores the nature and scope of shareholder activism in Australia (including reference to international developments) and its implications for corporate governance.

In this chapter we give a brief overview of corporate governance in the United States (‘US’), the United Kingdom (‘UK’), New Zealand, Canada, South Africa, India and Singapore, some of the major Anglo-American corporate governance jurisdictions that are based on the unitary (one-tier) board model. In Chapter 12 we deal with corporate governance developments in the European Union (‘EU’), the G20/OECD Principles of Corporate Governance, and corporate governance in Germany, Japan and China. The Principles include traditional Anglo-American corporate governance principles but go wider – as well as principles applying to a traditional unitary board structure, they include principles applying to a typical two-tier board structure.

The propositions of a scientific theory are connected with empirical states of affairs. Determining how theoretical propositions are connected with empirical facts, what Carnap called the “empirical significance” of a theory, is a complex affair. Carnap’s account of the relationship between theoretical frameworks and methods of observation has come in for plentiful criticism, alleging that Carnap’s theory of science does not allow for a sophisticated entwinement of theory and observation, instead favoring heavy formalism and a brittle reductionism. I present evidence that Carnap’s account of the distinction between theoretical and observation languages is more flexible than it is usually depicted to be and is motivated by his philosophy of science. In particular, in his mature work Carnap argues that the "specific calculus" of a scientific theory, including mathematical structure and physical laws, are included in the axiomatic foundations and linguistic framework of that theory. Carnap’s account of language thus turns out to be deeply entangled with his philosophy of science, and one cannot be understood independently of the other.

Mainstream social science, when it looks for parallels with the natural sciences, tends to look to classical Physics, which stresses laws, causes, and theories. I argue that we should look instead to Biology, which explains principally with processes, mechanisms, and models. Here I look briefly at Evolutionary Biology and Developmental Biology, where reductionist gene-centric explanatory programs have failed – decisively and spectacularly (and relatively recently). Evolution involves not just genes (let alone selfish genes) but multilevel processes of modular tinkering, very much like what I have called continuous (trans)formation, including processes of co-evolution that are strikingly analogous to what we see in the social world. Similarly, gene expression, rather than a largely mechanical DNA-directed bottom-up process, is as much a matter of manipulating and transforming genetic material as it is processing the information that it contains. Gene expression can only be properly performed within multiple, complexly intertwined, self-organizing regulatory networks. More broadly, I argue that Systems Biology, which is on the cutting edge of twenty-first-century Biology, provides an attractive model for relational/systemic social sciences.

Chapter 6 is concerned with theories and models in economics. Economists typically prefer to speak of “models” rather than “theories” and of “generalizations” or “assumptions” rather than “laws.” Economists still speak of theories, but only when referring to subdivisions of the discipline. Why? What are models and how are they related to theories? Why are economists so enamored of models? Do they supersede or incorporate laws? Without settled definitions of theories or models, it is unclear whether the focus on models is just a change in terminology, or whether there is something interestingly different in the practice of contemporary economics. This chapter surveys philosophical conceptions of theories and defends a view of theories as sets of lawlike statements that are systematically interconnected. It argues that models should be understood as conceptual explorations without empirical commitments. They are definitions of predicates or kinds of systems. Models can be used to theorize, explain, or predict, when one offers theoretical hypotheses asserting that parts of the real world belong to the extension of the predicate a model defines.

In the framework of computational cognitive modeling, natural language understanding and generation must be integrated with other cognitive capabilities, such as reasoning and learning. The language understanding component of an intelligent agent extracts and formally represents the meaning of texts and dialog turns. The output of language understanding must reflect the speaker’s intended meaning and be sufficiently detailed to serve as input to reasoning and action in artificial intelligent agents. One kind of agent action is verbal, so agents must include a language generation capability. This chapter describes a particular language understanding system that meets the requirements for the above language capabilities and also puts forward methodological arguments about the interplay between theories, models, and computational systems.

This chapter highlights how the evolving field of implementation research is being used to address problems of implementation of health policies, programs, practices, and technologies in low and middle-income countries (L&MICs). Implementation research offers a way to understand and address implementation challenges and contribute to building stronger health systems within the realities of specific and changing contexts. It is used to assess how and why interventions work, including the feasibility, adoption, and acceptance of interventions and their coverage, quality, equity, efficiency, scale, and sustainability. A well-designed research question is critical to successful implementation research, and provides the basis for choosing the research methods and how likely the research will influence policy and practice. In describing the theories, frameworks and tools used in implementation research, they are shown to be well suited to address inter-dependent and complex problems around improving people’s wellbeing – a critical mandate for achieving Universal Health Coverage and the Sustainable Development Goals.

Insights into killing can be obtained by considering theories of general crime and non-lethal sexual offending. This chapter considers the theoretical positions of Marshall, Barbaree, Malamuth, Ressler et al. and Seto. Drive theory fails to explain behaviour and has largely been replaced by incentive motivation theory. The distinction between organized and disorganized lust killers is not an absolute one but represents two extremes on a continuum. By sensory preconditioning, two events that occur together can become associated, such as sexual desire becomes paired with an aversive emotion. Even though killing appears to be maladaptive, evolutionary approaches can still give insights. The theory of Belsky et al. suggests that uncertainty of social support during development is assimilated and plays a role in determining reproductive strategy. An evolutionary argument suggests that male serial killers reflect a hunter/stalking strategy, whereas female serial killers reflect a strategy of staying at home and maximizing genetic benefit.

Chapter 12 traces the role of linguistics within translation studies back to Roman Jakobson’s ‘On Linguistic Aspects of Translation’ of 1959. To illustrate how linguistic theories and concepts have developed and contributed to translation studies, it presents a map drawn up on the basis of a bibliometric survey, focusing on three major stages – pure linguistics, discourse analysis and multimodality. In light of the way in which the relationship has developed between translation studies and aspects of linguistics that have been applied to translation research, in particular multimodal discourse analysis, the chapter suggests how the relationship might continue to develop.