Corporate Governance Issues Facing Small Corporations in Australia

Small businesses make up a majority of businesses in Australia, providing an impetus for economic development. However, guidelines for corporate governance best practices and rules and regulations for compliance are not tailored to the governing small businesses. Since governance is concerned about direction and control by the board of directors for outside shareholders, in Small Businesses this is the role of owner/managers. Governance of small businesses is not clearly defined as there are no rules and regulations governing small business, they do not understand corporate governance. Therefore this study aimed to investigate the corporate governance issues facing small businesses in Australia. This study was conducted using a sample of twenty one participants consisting of small business owner/managers and executive directors of industry associations. Interviews were conducted using structured interview schedules containing both open and close ended questions. Quantitative data were analysed using SPSS and Qualitative data were content analysed. The majority of small businesses did not understand the importance of corporate governance to their business. Therefore, this study suggests a code of best practice tailored to small businesses in order to communicate the governance process and adoption of on-line reporting to reduce the regulatory burdens for small businesses.