Abstract
This study explores an alternative approach to regulation for addressing corporate
governance problems relating to director and executive remuneration disclosure that are often
associated with corporate collapses worldwide. Drawing on the concept of collibration, an
approach to managing tensions between opposing forces in a social arena through
government intervention, the study explores its application to the development of a unique
regulatory framework, comprised of a mix of state and self regulation for corporate
governance in Australia. Thereafter the study examines the impact of mixed regulation on
disclosure level of director and executive remuneration in Australian firms. The results of
econometric analyses show that remuneration disclosure levels are significantly higher after
the establishment of a mixed regulatory regime. After controlling for firm specific
characteristics, improvement in the level of remuneration disclosure is found to be primarily
driven by the establishment of remuneration committees, chairman and CEO role separation,
presence of CEO on remuneration committee, number of female directors on remuneration
committee and the presence of remuneration consultant – thus highlighting the key aspects of
mixed regulatory initiatives influencing disclosure levels in Australia.
In addition, this research examines the distinctive case of MNC-subsidiaries in
Australia, by uncovering how multi-nationality can affect disclosure level of director and
executive remuneration. The results suggest that, other things being equal, MNCs are less
responsive to increased disclosure requirements than their local counterparts in Australia
unless they have substantial interactions with Australian product markets.
The study lends support to the growing body of literature which advocates collibration
as a contemporary approach to reduce agency problems through government intervention.
The findings demonstrate the effectiveness of collibration in facilitating the implementation
of recommended self-regulatory practices to improve remuneration disclosure. The analysis also demonstrates that collibration can act as an effective tool to develop a regulatory
framework that aligns state regulation designed to protect shareholder interests with market
oriented self-regulation.